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The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy Hardcover – January 22, 2013


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Product Details

  • Hardcover: 232 pages
  • Publisher: Princeton University Press (January 22, 2013)
  • Language: English
  • ISBN-10: 0691158681
  • ISBN-13: 978-0691158686
  • Product Dimensions: 9.3 x 6.4 x 0.9 inches
  • Shipping Weight: 1.1 pounds (View shipping rates and policies)
  • Average Customer Review: 4.2 out of 5 stars  See all reviews (30 customer reviews)
  • Amazon Best Sellers Rank: #232,630 in Books (See Top 100 in Books)

Editorial Reviews

Review

"[Michael Pettis is] a brilliant economic thinker."--Edward Chancellor, Wall Street Journal

"Insightful. . . . [O]ffers a sweeping perspective that links trade, exchange rates, and cross-border capital flows to underlying domestic taxation, investment, and fiscal policies. . . . Pettis's erudite, but lucid and very readable analysis brims with surprising ripostes to conventional wisdom. . . . Pettis's stimulating, contrarian take on the present crisis challenges dogma with clear thinking."--Publishers Weekly

"This is a book that should be read by: (a) politicians, central bankers and anybody else involved in macroeconomic policy; (b) all economists; (c) all students of economics; and (d) everybody else. The Great Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy by Michael Pettis is as sharp and clear as a cut diamond in its analysis of the continuing global imbalances. The author brings logic, accounting identities and clarity of thought and language to bear on the issue of prospects for the global economy, putting most other commentators into the shade."--Diane Coyle, Enlightened Economist

"[A] book full of easy-to-understand, yet often misunderstood theories, explanations and predictions for what went wrong internationally before the 2008 Financial Crisis, what has been going on since, and where things are likely to head in the future. . . . The Great Rebalancing is probably one of the clearest, most elegant and logically written explanations of world trade, including both how policies affect trade and how trade affects economies. . . . [T]his is not just a China book, but a book encompassing some of the biggest economic and financial questions of our time. The persuasive, clear and well-reasoned arguments behind many of the seemingly unorthodox ideas in the book will make it both pleasing and nicely unsettling for many readers. Hopefully its message will be heard amongst policymakers before some of the more disturbing predictions become realities."--James Parker, Diplomat

"With much pleasure, I highly recommend Michael Pettis' newest book The Great Rebalancing. . . . Michael Pettis has taught me most of what I know about global trade. I also happen to believe he is the world's foremost expert on China in relation to trade and global macro events. I give two thumbs up to The Great Rebalancing."--Mike "Mish" Shedlock, Global Economic Analysis

"I've been waiting for this book for over 10 years. . . . Anyone who wants to understand international economics better will benefit from this book. I cannot recommend it more highly."--David Merkel, Seeking Alpha

"This is a dense and well-argued book. . . . It will be read with interest by the large and growing community that follows China's economy."--Mark O'Neill, South China Morning Post

"The Great Rebalancing is probably one of the clearest, most elegant and logically written explanations of world trade, including both how policies affect trade and how trade affects economies. . . . [T]his is not just a China book, but a book encompassing some of the biggest economic and financial questions of our time. The persuasive, clear and well-reasoned arguments behind many of the seemingly unorthodox ideas in the book will make it both pleasing and nicely unsettling for many readers. Hopefully its message will be heard amongst policymakers before some of the more disturbing predictions become realities."--James Parker, Diplomat Pacific Money Blog

"[F]ascinating reading."--BizEd

"[The Great Rebalancing] is original and quite convincing, and coherently challenges conventional accounts."--Choice

"Demonstrating how economic policies can carry negative repercussions the world over, The Great Rebalancing sheds urgent light on our globally linked economic future."--World Book Industry

From the Inside Flap

"Through the past decade of China's financial and strategic emergence, Michael Pettis has been a source of unfailing common sense about the possibilities and limitations of the Chinese model. Now he has put his analysis and recommendations into one concise book. I highly recommend reading and reconsulting his book to put the daily flow of China news into perspective."--James Fallows, author of China Airborne

"This is a brilliant book, one that absolutely must be read by all who are concerned with globalization's future. Michael Pettis debunks the reigning conventional wisdom about international trade, finance, and globalization, and provides the most clear-eyed, unbiased, and unvarnished insights into how the Chinese economy works. From Chinese savers to Greek debtors to American bankers, Pettis shows how we are all connected--and what to prepare for on the road ahead."--Clyde Prestowitz, author of The Betrayal of American Prosperity

"Michael Pettis has written an essential guide to the macroeconomic imbalances that bedevil today's global economy. We ignore his message at our peril."--Dani Rodrik, author of The Globalization Paradox

"This is a profoundly interesting exploration of the causes of the trade and capital imbalances that produced the 2008 financial crisis. Michael Pettis argues that the structural gap between China's domestic consumption and production is the central reason for its pursuit of export-led growth through currency undervaluation. His analysis focuses valuable attention on the deep domestic reforms required in all the major trading countries for the 'great rebalancing' of their international accounts--and the avoidance of continuing crises."--Robert Skidelsky, author of Keynes: The Return of the Master


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Customer Reviews

This book is interesting from the outset.
Lemas Mitchell
Reading Pettis book will give you an edge in understanding global economics and the world path ahead, highly recommended .
Marc
Especially for europeans who want to understand the technics of trade surplus and deficit.
didier

Most Helpful Customer Reviews

63 of 71 people found the following review helpful By Lemas Mitchell on January 24, 2013
Format: Kindle Edition Verified Purchase
This book is interesting from the outset.

1. It is written for the intelligent public. I thought at first that it would be a rehash of all his old online posts from his (blocked in China) website (a la John Mauldin, Endgame: The End of the Debt Supercycle and How It Changes Everything). But there is a lot of deeper thought and expansion on things that Pettis has discussed before.

2. There is a lot of intersection with the writings of Nassim Nicholas Taleb.

a. The first way is that he spends a lot of effort trying to break the hold of academic economists on public discourse and he is fully aware of the limits of their predictive power. (He is not quite as derisive as Taleb.)

b. A lot of his epistemic underpinnings are very similar. The first book that he intersects with is Nassim Taleb's Antifragile in that he views smaller financial crises as instrumental in preventing the type of imbalances to build themselves up that lead to Titanic financial crises. He also give a nod to Taleb's "retrospective distortion" (i.e., imagining that events were more predictable in the past than they in fact were) with respect to using Confucianism to explain Asian success.

3. I can see that the author is well read. Pettis actually mentions in passing many other "miniature myths" (the Confucian work ethic, Dependency theory).

4. From the outset, he is clear that this is NOT a moral issue (as some have tried to make it to be).
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32 of 37 people found the following review helpful By David Merkel on February 21, 2013
Format: Hardcover
I've been waiting for this book for over 10 years. When Michael Pettis wrote The Volatility Machine, he explained how emerging market countries imported the monetary policies of the developed countries.

Now, in the present mess of economic policies put forth by most governments in our world, he explains how the debt and trade imbalances will eventually have to balance.

We've had other economic eras where trade did not balance. In the era of mercantilism, trade did not balance, because the mercantilistic countries sought gold, and adopted policies that favored exports, so that their nation would receive gold. Smart, huh?

Well, no. Gold is good; I like it, and it preserves value better than anything else, but when you take actions to disproportionately get gold, you overpay for it. Then when you realize your error, and start to sell gold for goods, the market knows that you are selling, and the value of gold falls.

That is why countries that force growth tend to lose. Because they force growth through overinvestment, they look like stars for a time, but eventually the declining marginal productivity of capital catches up with them, as it did with Japan in the late '80s or early '90s, and the Soviet Union in the 1970s.

Governments are no good at directing growth. We knew in the late '70s that import substitution did not work. It took 20-30 years more to realize that export promotion does not work long-term. Happily, my old professor Bela Belassa never lived to see his theories repudiated. (He was a cold guy, but not totally; he had mercy on me once, and for that I am grateful.)

Back to Pettis: his main argument is that the surplus countries must take losses over loans to deficit countries.
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19 of 22 people found the following review helpful By Jackal on May 16, 2013
Format: Hardcover
The book is good, but quite frustrating to read.

CONTENT
One key message is that the Chinese GDP growth is too driven by investment. The author argues that it would be beneficial if future growth would be more driven my consumption. For reasons explained in the book, the Chinese households are subsidising the investors (state-run companies and wealthy people). These subsidies go to powerful actors, so it will be extremely difficult for the Chinese government to change course. He does not say it straight out, but he clearly thinks things will end badly.

The book is about the imbalances in capital flows and trade between countries. Most of the book is devoted to China, but it also deals with the potential conflict between Germany and the European PIIGS.

STYLE
The author wanted to write a book that any educated person could read. I like this objective, but unfortunately he does not succeed in this regard. You will not understand the author's argument if you do not have familiarity with macroeconomics. Unfortunately, the author refuses to use charts and simple equations in the book. I seriously disagree with him that it is making the book more readable. The book centers around the balance of payment statistics, so why not show those statistics in a table? Currently, if you are not willing to look up the numbers and the GDP definition yourself, you just have to take the author's arguments at face value. Not good. For instance: You studied macroeconomics some time back, but are not familiar with the accounting changes, e.g. the split between government expenditure and government investment. So you have to look it up to understand the author.
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