Middle Class Hurt by Broken Global Banking System: ‘Unfair Trade’ Author Says
From growing income disparity to chronic unemployment in the U.S to the sovereign debt and banking crises in Europe to slowing and stagnant growth in China and Japan, globalization is much to blame for what ails the global economy, says Michael Casey of Dow Jones and author of Unfair Trade: How Our Broken Global Financial System Destroys the Middle Class.
But “globalization” runs run much deeper than just trade policy and the shift of manufacturing to cheap labor markets, Casey says. The biggest problem facing middle class people around the world is a broken global banking system where the rich get richer and the poor get poor, as the title of his book suggests.
In the wake of the 2008 financial crisis, “the feeling is that we haven’t really got to the heart of what the problem was and in my mind it was a banking crisis,” says Casey, who goes on to cite the most recent examples global finance gone awry: Spain’s banking liquidity crisis, JPMorgan’s loss of $2-3 billion in just a matter of weeks or Jon Corzine’s MF Global’s loss of billions in customer funds before its ultimate collapse earlier this year.
A big hindrance to the fixing the global financial system is the fact that lawmakers on both side of the Atlantic are not working together to find coordinated solutions, Casey argues. Politicians in the U.S. bicker back and forth over the best policies for this country. In Europe, each country fights on behalf of its own self-interest, without regard to the EU or the global banking system as a whole. And then there is China, which has not played fair in the global market place by manipulating its currency for the last decade.
In the accompany interview, Casey explains how China played (and continues to play) a large role in what fueled the 2008 financial crisis by running an export-driven economy perpetuated by a nation of savers.
It’s a Small World, After All
In writing his book, Casey traveled the world—to Asia, Europe, Australia and beyond—tracing the flow of goods and talking to people on the ground to get a better understanding of the global forces at play.
In the book he writes:
“Members of the prosperous business class in the bustling port cities along China’s eastern coast — Shanghai, Shenzhen, Guangzhou and Tianjin—are that country’s biggest winners in this arrangement. Its losers are the poor and the lower middle classes from China’s rural interior….
“This coast-versus-hinterland dichotomy in both China and the United States is exhibit A in our case for showing how the wide gaps in opportunities for people in difference circumstances around the world reflect a fundamental failing in the structure of the global economy.”
Most voters around the world do not understand how interconnected the world is today, he says. In the U.S., while politicians are talking about the issues people care about, they are not addressing the root cause for many of our country’s problems.
Will Congress get anything accomplished before the November elections?