My last blog entry inspired an old Brazilian friend of mine, with whom I hadn’t had any contact for years, to comment on this section of the interview:
"It seems to me that the US is becoming increasingly isolationist, largely because it is increasingly uncertain that the benefits to the US of a US-dominated world order still exceed the costs. When the US comprised a much larger share of the “globalized” part of the world, it retained a greater share of the benefits of a stable trading environment and it cost less to maintain that environment. As the US becomes a declining share of the globalized world, the costs of imposing stability (and I have no illusions that this is done for charity) rise, and its share of the benefits decline. It is only a matter of arithmetic that at some point the costs will exceed the benefits."
My friend is a very thoughtful economist who writes often about global governance and trade, and I really enjoyed and learned from the subsequent discussion, which quickly became a three-way conversation with one of his friends. In the conversation I tried to explain why I think the break-up of the current monetary and trading regime that governs much of the world, and an American turn inward towards isolation, are very likely over the next few years, and indeed almost inevitable.…China Financial Markets
How much longer can the global trading system last?Michael Pettis | Professor of Finance at Peking University’s Guanghua School of Management
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