The United States, China and the New World Order
When the global financial crisis unfolded, the immediate focus of those searching for explanations of the causes was almost exclusively on ‘micro’ factors, involving the behaviour of the banks and failures in the regulatory system, that is, on the factors considered in the previous chapter. Only later were attempts made to place these factors in a wider macroeconomic context involving global imbalances. Pisani-Ferry and Santos (2009), for example, point out that ‘there was a collective failure to grasp fully the link between global payments imbalances and the demand for safe (or seemingly safe) financial assets and the manufacturing of those assets’. They continue: ‘it was the combination of strong international demand for such assets, largely in connection with the accumulation of current account surpluses in emerging and oil rich economies, and an environment of perverse economic incentives and poor regulation that proved to be explosive’ (p. 9).
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