Plain Talking

In this article by Martin Wolf from the Financial Times (and quoted from Business Spectator) Mr. Wolf clearly lays down the essential and fundamental requirements for a sustainable economic rebalancing between China and the United States.

Mr. Wolf imagines the following threat from President Obama:

"I would then argue that China’s determination to thwart needed adjustment in exchange rates had become intolerable. The US is entitled to protect itself against such mercantilism. The trading system would be terribly damaged. But the alternative would be unbearable."

In decades of cold war with the Soviet Union the concept of Mutually Assured Destruction helped ensure that no nation would press the button. Sadly in this catastrophe there is no alternative. China and the United States will need to break there damaging co-depency, and when it occurs it will be a painful process for both parties and the wider economic community.