Confront imbalances to end market turmoil

by | February 26, 2014

Originally published at Financial Times | February 26, 2014

The rebalancing of global current accounts has been hailed as a major positive development since the financial crisis. But it is in the years ahead that the adjustment will face its most difficult test.

The slumps in demand that slashed developed world deficits are now giving way to recovery. In their absence, world leaders need to find new ways to correct lingering excess surpluses in countries like Germany and China and lift export restrictions in deficit nations such as the US.

The primary cause of the 2002-08 era of exploding imbalances was currency engineering. The largest surpluses emerged in countries with strong export industries that pegged their currencies to, or kept them competitive with, the US dollar. The lasting symbol of this period is the amassed foreign exchange reserves in China, the Middle East, and parts of the emerging world.

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Filed Under: Economics

About the Author

Alex is the co-founder of Jackson Hole Economics, LLC, a private research organization which provides analysis of key topics in economics, politics, the environment and finance, and develops actionable ideas for how sustainable growth can be achieved.
Alex has two decades of experience growing and transforming organizations in the financial and non-profit industry. He served as CEO and CIO for a number of publicly listed financial services companies and also as the Chief Financial Officer of the Bill & Melinda Gates Foundation, where he managed a range of day-to-day operating functions, was a member of the management committee and created the program-related investments group.
Alex served as a White House Fellow in the Clinton Administration and as an assistant to the Secretary of Defense. He is a member of the Board of Directors of Franklin Resources, Inc., a member of the Council on Foreign Relations, Chair of the Advisory Board of Project Syndicate and a board member of the American Alpine Club. Alex also writes regularly for various news outlets and is the author of The Big Thing: Brave Bea and Babu's Bindi, both children's books.  He is an avid mountaineer and rock climber and led the first major climb to raise money for charity through an ascent of Mt. McKinley.
Friedman holds a JD from Columbia Law School, where he was a Harlan Fiske Stone Scholar, an MBA from Columbia Business School, and a BA from Princeton University.

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