Financial Globalization Shows Signs Of Slowdown

Decline In Financial Globalization Is Double-Edged Sword
Susan Lund of the McKinsey Global Institute maintains in a recent article in the Project Syndicate that slowdown in financial globalization is a double-edged sword. On the positive side, she says the decline in cross-border capital flows could be a reversal of the increase resulting from “governments tapping global capital pools to fund chronic budget deficits” and actually reflective of historic norms.

If that is the case, she argues, then it is welcomed. However, the slowdown, which is occurring even in emerging economies, also represents a reversal of financial integration, particularly in Europe.

“Current trends seem to be leading toward a more fragmented global financial system in which countries rely primarily on domestic capital formation. . . . . And, while a more balkanized financial system does reduce the likelihood of global shocks creating volatility in far-flung markets, it may also concentrate risks within local banking systems and increase the chance of domestic financial crises,” Lund concludes.

US-Asia Trade Pact Gets Boost From Japan’s Entry
The Trans-Pacific Partnership (TPP) took a major step forward with the approval by the US of Japan into the talks. The TPP nations — the US, Canada, Mexico, Peru, Chile, Vietnam, Malaysia, Singapore, Brunei, Australia and New Zealand — have set a target of the end of 2013 to finalize negotiations.

The agreement announced by the White House also marks a step closer to a confrontation with members of Congress who represent districts or states with auto industry interests.

According to the Brookings Institution, the TPP countries will represent the largest export market for the United States and economic modeling estimates forecast benefits to the U.S. from the TPP will be $5 billion in 2015, rising to $14 billion in 2025.

New Zealand Ambassador Makes The Case For Global Trade
Ambassador Rt. Hon Michael Moore, his nation’s representative in TPP trade talks, addressed Johns Hopkins University’s School of Advanced International Studies and told the audience that “the need for [globalization] is deep in our species” and is a “process will not be stopped. Although it may be slowed, it will always be moving, because our species is always moving.”

A Plea For An End To The Politicization Of The Foreign Service
Susan R. Johnson, president of the American Foreign Service Association. Ronald E. Neumann, a former U.S. ambassador to Afghanistan, and Thomas R. Pickering, a former undersecretary of state, co-authored an editorial calling for the reform of the foreign service.

The authors argue that the politicization of the diplomatic corps has resulted in the foreign service being “relegated to a secondary status” and places in jeopardy “long-held concepts about the disciplined, competitive, promotion-based personnel system.”

 

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