Easy Money Is Back

Since the financial meltdown, it's become conventional wisdom that prior to the crisis, the world was awash in too much easy money—and that now it doesn't have enough. It's a tidy thesis, widely accepted. It's also wrong. What's remarkable about our post-crisis reality isn't that we're not capital-starved; on the contrary, we're still swimming in excess liquidity. During those months of panic, all that cash didn't evaporate. A lot of it just got stashed on the sidelines. Now the global pool is growing again, and the next market bubbles are already popping up.

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The 'Global Imbalances' Myth

As the economic crisis has eased in recent months, a questionable international consensus has emerged: The global economy needs to be rebalanced. "We cannot follow the same policies that led to such imbalanced growth," President Barack Obama said during his Asia trip last month. European Central Bank head Jean-Claude Trichet declared in September that "imbalances have been at the roots of the present difficulties. If we don't correct them, we'll have the recipe for the next major crisis."

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Much Ado About Dubai

Global markets sank sharply at the end of last week on fears that Dubai World, a subsidiary of the government of Dubai, was on the verge of defaulting on approximately $60 billion of the emirate's $80 billion in total debt held by creditors world-wide. The rush of news stories added to the wildfire of panicky speculation, with headlines ranging from "Dubai Default Risk May be Big US Bank Problem," to "Dubai Shows Limits of Government Rescues."

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Obama and Chinese President Meeting Should Cover New Topics

When President Obama sits down next week with Chinese leader Hu Jintao in the Great Hall of the People in Beijing, the two are likely to cover the familiar terrain that has marked relations between their nations: the global economy, currency and trade disputes, carbon emissions and the upcoming Copenhagen summit, and, of course, Taiwan.

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LA TIMES BOOK REVIEW: SUPERFUSION BY ZACHARY KARABELL

In February, when President Obama signed a $787-billion stimulus bill, there was little question where the money would come from. The U.S. Treasury would print up bonds, and the Chinese government would buy a large share of them. After all, if the U.S. economy was to ever really tank, China's $1-trillion investment in U.S. debt would tank too. And who then would be left to buy a third of China's exports?

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Zachary Karabell on Chimerica: The Imminent Economic Integration of China & the US In Brief

In the wake of the global financial crisis, the unique relationship between China and the US has become the fulcrum of the world economy. As our largest creditor, Chinas lending to the US has buoyed American companies and even allowed them to reinvent themselves, selling to Chinese consumers. Author and economic trend analyst Zachary Karabell argues that our two economies have become so interconnected that theyve become one system: Chimerica. Karabell traces the initial forging of Chimerica that began after the suppression of the protests in Tiananmen Square in 1989 to the present. With a look at current affairs and the changing global economy, he urges that we accept China as the predominant economic partner of the future, or find ourselves left behind.

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Superfusion

The emergence of China as an economic superpower is now widely recognized, but as Zachary Karabell reveals in his new book Superfusion, that is only one aspect of the story. Over the past decade, the Chinese and U.S. economies have fused to become one integrated system and how they manage their relationship will determine whether the coming decades witness increased global prosperity or greater instability.

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Interview: Two countries, one economy. Welcome to 'Chimerica'

China and the United States are not fierce economic competitors and tentative allies. In fact, in economic terms they are not two ‘countries’ at all, but rather a single, unified behemoth called ‘Chimerica.’ That, anyway, is the counterintuitive opinion of “Wall Street Journal” contributor and New York-based economist and global financial consultant Zachary Karabell. Karabell’s new book, “Superfusion: How China and America Became One Economy and Why the World’s Prosperity Depends on It,” outlines the emergence of a singular mega-economy that “is hiding in plain sight, unrecognized, unacknowledged, and unwanted” by “many millions whose lives are being reshaped by it.”

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Deficits and the Chinese Challenge

Consider what happened in 1946, when a cash-strapped Great Britain turned to the U.S. for a loan. For 30 years or more, the British had been consumed by the threat of a rising Germany. Two wars had been fought, millions of lives had been lost, and the British treasury was dramatically depleted in the process. Britain survived, but the costs were substantial.

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The Recession Is Over — and It Isn’t

With Wall Street — and the Federal Reserve — in a headlong rush to declare the recession over, the economic data has indicated that the simple binary recession/no recession framework obscures more than it reveals. Yes, defined purely in terms of Gross Domestic Product (GDP), the recession looks to be winding down, with strong indications that GDP is about to turn positive after a long and painful swoon.

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IBM and the New American Multinational

The wreckage of the financial crisis is producing many warnings that globalization is dead, as trade and investment slow. Nothing could be further from the truth. In fact, global companies have rarely been in a stronger position, and if you want to get a sense of where such businesses are heading, look no further than IBM.

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