All economies are now said to be going through a process of globalization, or homogenization if you will. In other words, they are emulating the best practices out there. Such processes of emulation is of course premised on other platforms of the economy being functional.. That the banks, regulatory agencies, credit rating systems, as well as the anti-insolvent laws, are all in favor of greater entrepreneurship and risk-taking activities are first steps to an improving economy
Yet, every major economy is facing enormous economic problems that are different from each other. Instead of a clear vision of where the next phase of growth can easily be engineered, there remains problems galore.
China’s economy is slowing down, while the European Union cannot seem to grow out of its debt trap. Meanwhile the Japanese economy has stagnated since the burst of the stock bubble in 1989, and more importantly, the United States is only beginning to emerge from the Great Recession of 2008; though not before pumping USD 26 trillion to save the banks.
Every country seems to be having its own problems, and none appear to know how to overcome their economic difficulties jointly; not even in the European Union, where the free market is supposed to enlarge, not shrink, with the exit of Britain.
The problem, according to Michael Petis, lies in the tendency to look at every economic problem in its respective silo. Common economic problems, regardless of their scale and sequence, have to be solved with one broad sweep, without which the world will only be mired in stagflation; where growth becomes stalled, income appreciation moribund and inflation tracking ever upward.
Michael Petis is warning the world where the promise is high, but the solutions delivered are low. What he meant by rebalancing is the need to talk about how to solve economic problems together; without which the growth of the world economy will continue to be sporadic.