The Global Financial Crisis and the Restructuring of the World Economy

The global financial crisis of 2008-2010 ended one era of the global economy and produced a transition to a different and uncertain one. For more than thirty years, U.S. domestic imbalances increased from a series of poor policies. Resulting U.S. weaknesses were exploited by several Asian nations causing domestic imbalances to spill into the global economy as global imbalances. The resulting global financial crisis demonstrates the importance of domestic restructuring. Powerful U.S. domestic interests likely will block restructuring even as China engages in continuing restructuring, thereby leaving imbalances that will undermine the existing U.S.-China relationship and promote much greater conflict.