Paul Lachine

The Weary Titan

Many people still look at the American economy, towering over the rest of the world with its $14 trillion GDP, as the engine of global recovery. But an increasingly uncompetitive civilian industry, the burden of military commitments overseas, and wage stagnation all signal that the American titan might be wearying.

PARIS – The unfolding “currency war,” which is likely to dominate discussions at the upcoming G-20 summit in Seoul, must be assessed against the backdrop of the new landscape of power – a landscape that has been transformed, in just two years, by the first crisis of the globalized economy.

The economic consequences of the crisis have left a number of developed countries in a severe slump and scrambling to bring about a healthy recovery. By contrast, the emerging-market countries, after a short slide, have managed to re-ignite their growth engines and are sailing full-speed ahead, racking up impressive growth rates.

There have been financial and monetary consequences as well. Although no currency is as of yet qualified to replace the dollar as the world’s reserve and transaction currency, this “exorbitant privilege,” as Charles de Gaulle put it, has come under stealthy attack. In March 2010, the “ASEAN + 3” grouping, which includes China, Japan, and South Korea, established a reserve fund of $120 billion, under the so-called “Chiang Mai Initiative.” This time, unlike in 1997, the United States did not even attempt to torpedo this embryonic “Asian Monetary Fund.”

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.


Log in;
  1. China corruption Isaac Lawrence/Getty Images

    The Next Battle in China’s War on Corruption

    • Chinese President Xi Jinping knows well the threat that corruption poses to the authority of the Communist Party of China and the state it controls. 
    • But moving beyond Xi's anti-corruption purge to build robust and lasting anti-graft institutions will not be easy, owing to enduring opportunities for bureaucratic capture.
  2. Italy unemployed demonstration SalvatoreEsposito/Barcroftimages / Barcroft Media via Getty Images

    Putting Europe’s Long-Term Unemployed Back to Work

    Across the European Union, millions of people who are willing and able to work have been unemployed for a year or longer, at great cost to social cohesion and political stability. If the EU is serious about stopping the rise of populism, it will need to do more to ensure that labor markets are working for everyone.

  3. Latin America market Federico Parra/Getty Images

    A Belt and Road for the Americas?

    In a time of global uncertainty, a vision of “made in the Americas” prosperity provides a unifying agenda for the continent. If implemented, the US could reassert its historical leadership among a group of countries that share its fundamental values, as well as an interest in inclusive economic growth and rising living standards.

  4. Startup office Mladlen Antonov/Getty Images

    How Best to Promote Research and Development

    Clearly, there is something appealing about a start-up-based innovation strategy: it feels democratic, accessible, and so California. But it is definitely not the only way to boost research and development, or even the main way, and it is certainly not the way most major innovations in the US came about during the twentieth century.

  5. Trump Trade speech Bill Pugliano/Getty Images .

    Preparing for the Trump Trade Wars

    In the first 11 months of his presidency, Donald Trump has failed to back up his words – or tweets – with action on a variety of fronts. But the rest of the world's governments, and particularly those in Asia and Europe, would be mistaken to assume that he won't follow through on his promised "America First" trade agenda.