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The Great Rebalancing: Trade, Conflict, and the Perilous Road Ahead for the World Economy

4.23  ·  Rating Details  ·  188 Ratings  ·  25 Reviews
China's economic growth is sputtering, the Euro is under threat, and the United States is combating serious trade disadvantages. Another Great Depression? Not quite. Noted economist and China expert Michael Pettis argues instead that we are undergoing a critical rebalancing of the world economies. Debunking popular misconceptions, Pettis shows that severe trade imbalances ...more
ebook, 232 pages
Published January 3rd 2013 by Princeton University Press (first published December 1st 2012)
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Hadrian
Bearish analysis of the Chinese economy, saying among other things that it is investment-based, and part of global economic imbalances such as US consumption, commodity export in South America (Venezuela, Brazil, etc.), and the European debt crisis.

Very dense book, and one where I don't have the time to extract all of Pettis' arguments - but many of his ideas are intriguing, and some are becoming more likely to be true.
Athan Tolis
To read this book you need some A-Level economics, because the author does not bother to lay it out. Here's the necessary crib:

(1) Y = C + I + G + (X - M)
(2) Ydisposable = S + C
(3) Ydisposable = Y - TAX + TR

(2),(3) => S + C = Y - TAX + TR =>

(4) Y = S + C + TAX - TR

(1),(4) => C + I + G + (X - M) = S + C + TAX -TR =>

(5) (TAX - TR - G) + (S - I) = (X - M)

In plain English, equation (5) says that the budget surplus (tax collected minus transfers minus government spending) plus net savings
...more
Warren
Jan 23, 2015 Warren rated it it was amazing  ·  review of another edition
Shelves: ipe, globalisation
Wow ... if you want to read a book that blows holes in prevailing economic myths surrounding the current economic crisis, read this book. Simply astounding and written so that a layperson with no economics background can read and understand the author's arguments.
Christopher Myrick
Brilliantly and simply argued analysis on China, the EU and the US. I've been reading Michael's blog for the better part of a decade, so there's not much new in this volume, but it wonderful to have one of his best-developed arguments in one place. Free of jargon and a great entry point for new readers (on China economics or trade and current account matters more generally).
Sara
Jun 18, 2014 Sara rated it it was amazing  ·  review of another edition
Shelves: empire
The micro foundations delusion debunked

[Through my ratings, reviews and edits I'm providing intellectual property and labor to Amazon.com, Inc., listed on Nasdaq, which fully owns Goodreads.com and in 2013 posted revenues for $74 billion and $274 million profits. Intellectual property and labor require compensation. Amazon.com, Inc. is also requested to provide assurance that its employees and contractors' working conditions meet the highest health and safety standards at all the company's si
...more
Julian Haigh
Pettis takes Keynesianism to an international context to highlight credit distortions from trade imbalances, and their correlation to domestic savings and investment environments in the US, China and Europe.

Synopsis: GDP = consumption + investment; in a closed economy savings = investment. An open economy brings export opportunities, but this brings imbalance in relative domestic savings and investments. In looking to fix the global economy, surplus nations must accept their part in the systemic
...more
Void lon iXaarii
Sep 06, 2013 Void lon iXaarii rated it did not like it  ·  review of another edition
Well, this book was a surprisingly bad experience for me. I mean at least compared to what I was expecting. It started out with discussions on global trade which I agree are crucial, but then it gradually totally lost me. Tuned back in when he was talking about Europe but he lost me again. Huge sections of the book my mind would just blank out as he was talking confusing stuff. Weather this is due to my inability to follow him/not giving enough rereads, the author's inability to explain clearly ...more
Nils
Jun 28, 2013 Nils rated it really liked it  ·  review of another edition
Shelves: development
Really illuminating on the way that the global financial/trade imbalances led to 2007 crisis, and why it is so hard to undo these imbalances.

However, Pettis largely ducks the question of WHY these various governments have pursued these policies. Relatedly, he treats countries more or less as unitary rational actors, instead of assessing why these seemingly counterproductive or malicious strategies make sense to particular factions within these countries. Eg
*Allowing American consumers to spend
...more
Tobias
Dec 23, 2014 Tobias rated it really liked it  ·  review of another edition
Extraordinary book about the crossroads the global economy is at present. Pettis hammers home how contemporary problems can be understood simply by understanding the accounting identities of GDP. The problem with this book is that it's incredibly dense - not very long, but virtually every paragraph is important. It bears noting that, despite its brevity, it's actually extremely repetitive, which made it hard to get through.
David Bueche
Apr 05, 2014 David Bueche rated it it was amazing  ·  review of another edition
Great book! Really explains a lot of the macro-economic trends in a clear, concise way. Learn why the dollar as reserve currency is harmful to the US, why China's economic rise is threatened by the radical trade imbalance with the US, why the Euro will probably break up, (at least in Club Med), and many other measured predictions, (many of which are happening right now). Highly recommend.
Clark
Oct 19, 2014 Clark rated it liked it  ·  review of another edition
Pettis is a very interesting commentator on global macroeconomic and financial trends. He started his career as a emerging markets bond trader and somehow ended up teaching future PBOC students at Peking University. This book reads like a very long and thorough version of one of his blog posts.
Andrew Davis
Feb 07, 2015 Andrew Davis rated it liked it  ·  review of another edition
Shelves: economics
An interesting attempt to analyse current economic challenges and how they are will be resolved in some not too distant future. German growth rates will slow sharply for many years and German banks will take significant losses. Most of peripheral Europe will be forced to abandon the euro and to restructure its debt. China has already taken too long to address its domestic imbalances and it is running out of time. Japan is still struggling with the legacy of its over investment surge in the 1980s ...more
Thomas Cooper
Mar 08, 2016 Thomas Cooper rated it it was amazing  ·  review of another edition
If you read this with Niall Ferguson' teachings on Chimerica, you will have a solid understanding of the world today. Then keep up to date with the authors blog.
Anton
Nov 24, 2015 Anton rated it it was amazing  ·  review of another edition
Extremely well structured perspective on global trade and trade imbalances. This will change the way you think about politics and economics.
Chris
Dec 17, 2015 Chris rated it it was amazing  ·  review of another edition
It's uncanny how many of his predictions have since come true.
Asif
Mar 17, 2014 Asif rated it it was amazing  ·  review of another edition
This is THE best Econ book I have read so far. This Econ101 without "Suppose/Assume". Basic premise takes the Global trade as a closed system and builds its logics. Backtests the logical arguments and then implements them for future events. You will not laugh at this Economist!
Henning Bøgh
Jan 15, 2015 Henning Bøgh rated it really liked it  ·  review of another edition
The best part is the debunking of popular myths.
Ernie
Jun 13, 2013 Ernie rated it really liked it  ·  review of another edition
Great book that discusses the state of the global economy at the macro level. It basically comes down to the difference between total savings and total investment in a nation. That difference is used to then export or import capital from nation to nation. Reading this book I feel I have gotten a firm handle on how the world currently is shaking out to be and it's potential future for movement from crises to crises.
Magdalena
Oct 08, 2015 Magdalena rated it it was amazing  ·  review of another edition
Michael Pettis presents his theory in very interesting way. You might agree or disagree with him, but this book is definitely very interesting.
Adam
Apr 19, 2013 Adam rated it it was amazing  ·  review of another edition
I read Pettis' blog often and think he has an excellent way of explaining the imbalances of the world economy. I'm not an econ or accounting genius, but it was still easy to read and very insightful.
Nick Clark
Jan 13, 2015 Nick Clark rated it it was amazing  ·  review of another edition
Massive macroeconomic tour de force. Unsurpassed exposition on the link between trade and capital flows and their global implications. Highly recommended.
Joel Blunt
Aug 13, 2013 Joel Blunt rated it it was amazing  ·  review of another edition
One of the best books I've ever read on how global misbalances causes the global financial crisis. A must-read for anyone interested in the GFC.
Crocker Coulson
Apr 28, 2013 Crocker Coulson rated it it was amazing  ·  review of another edition
Best book I read so far this year. Essential reading for anyone who wants to understand China, global trade, next phase of our financial crisis
Vincent Tan
Mar 04, 2013 Vincent Tan rated it really liked it  ·  review of another edition
Little bit heavy but refreshingly clear analysis and discourse on global economics. Lots of home truths for politicians everywhere.
Adam
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Greenjeffs
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Jul 20, 2016
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Jul 18, 2016
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João Lima curral marked it as to-read
Jul 16, 2016
Julian Panero
Julian Panero rated it it was amazing
Jul 15, 2016
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“If rural migration was sufficiently large, it tended to repress wage growth. This made it fairly common for worker productivity to grow quickly as less productive rural workers and peasants moved to the industrial centers, where their productivity was much higher, but for wages to fail to keep pace. When this happens wage growth will lag productivity growth and the worker’s share of total income will decline, even as total income might rise.” 0 likes
“The source of the global crisis through which we are living can be found in the great trade and capital flow imbalances of the past decade or two. Unfortunately because balance of payments mechanisms are so poorly understood, much of the debate about the crisis is caught up in muddled analysis.” 0 likes
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