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| Author: | Brad W. Setser, Fellow for Geoeconomics |
|---|
March 2009, Volume 46, Number 1
Finance and Development
National decisions, not international summits, will remake the global financial system
After Asia's financial crisis, the world's leading economies launched a major effort to remake the international financial system. Ten years later, they decided to try again. The 1998 effort to revise the world's "financial architecture" followed a crisis that had originated in the unwinding of the external deficits in the emerging world - deficits that were for a time willingly financed by banks and private investors in the world's wealthy economies. The second effort will follow a systemic financial crisis that started in the United States, spread to European banks that had borrowed dollars to buy U.S. securities, and then infected most of the world economy.
A downturn in U.S. home prices that led to large losses at the large banks and broker-dealers triggered the current crisis. But the household deficit of the United States, the United Kingdom, and many euro area economies couldn't have been financed for as long and at as low a rate without an unprecedented increase in the assets of the emerging world's central banks and sovereign funds. Private investors were never that keen on financing large deficits in the slow-growing United States; they wanted to finance the fast-growing emerging world.
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Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
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