Burma's nightmare

Strange. The Burmese democracy leader Aung San Suu Kyi (picture) faces as long as five years in jail after new charges were brought against her by the military junta following a bizarre intrusion this month at the lakeside home where she lives under house arrest. Suu Kyi, whose detention without charge was due to expire in weeks, now faces a criminal trial after an American man could force the security cordon surrounding the house by swimming across the near by Inya Lake in central Rangoon. Despite pleas for him to leave he stayed for two nights, her lawyers confirmed, and he was arrested by the Burmese authorities as he swam back the following morning. The man, named as John Yettaw, has also been charged with entering a restricted area and with violating immigration laws. News will come out later on.

One article came to my mind about Burma. Not yet a reality, but an option. How about a nuclear Burma-Myanmar in the coming years? "Rich with uranium and desperate for control, the Burmese junta may find a nuclear option attractive", Burma journalist expert Bertil Lintner wrote in a recent scholar review article. [Click the title to access the report]

"Until such reports can be verified, or refuted, speculations remain. But a nuclear-powered Burma would be a nightmare for all neighbors and would upset the balance of power in the region. All that is certain is that Burma has a nuclear program. It may be years, if not decades, away from developing nuclear-weapons capability. But the fact that the country's military leadership experiments with nuclear power is cause for concern."

"Burma first initiated a nuclear research program as early as 1956, when its then-democratic government set up the Union of Burma Atomic Energy Center, UBAEC, in then-capital Rangoon. Unrelated to the country's defense industries, it came to a halt when the military seized power in 1962. New power-holders, led by General Ne Win did not trust UBAEC head Hla Nyunt.

In February 2001, Burma's present junta, the State Peace and Development Council decided to revitalize the country's nuclear program, and Russia's Atomic Energy Ministry announced plans to build a 10-megawatt nuclear research reactor in central Burma. In July 2001, Burma established a Department of Atomic Energy, believed to be the brainchild of the Minister of Science and Technology, U Thaung, a graduate of Burma's Defense Services Academy and former ambassador to the United States. US-trained nuclear scientist Thein Po Saw was identified as a leading advocate for nuclear technology in Burma.

Burma has uranium deposits, and the Ministry of Energy has identified five sources of ore in the country, all low-grade uranium unsuitable for military purposes. But the defectors claim that two more uranium mines in Burma are not included in official reports: one near Mohnyin in Kachin State and another in the vicinity of Mogok in Mandalay Division. The ore is supposedly transported to a Thabeikkyin refinery, conveniently located between the two alleged mines." End of quotes.


The Australian newspaper wrote in the past that Burma, entertaining good relations with China for its Indian ocean access, "was seeking to acquire missile and nuclear weapons technology from North Korea". [http://tinyurl.com/q47qnq]

20 ans après Tian'an Men, la Chine rêve-t-elle de la Démocratie?

L'image de la résistance et du courage sur Tian'an Men avec ce manifestant, photographie de Stuart Franklin de Magnum, l'homme réussit à faire s'immobiliser une colonne de chars.

La trompeuse propagande chinoise n'y pourra rien. Même si ces jours-ci les victimes que célèbrent la Chine sont essentiellement les enfants tués dans le terrible séisme du Sichuan. Mais ailleurs dans le Sichuan, l'arrestation de Zhou Yongjun, passeport américain, 41 ans, ancien de Tian'an Men, succédant à sa longue arrestation, le prouve. Pékin s'inquiète de ce 20e anniversaire de Tian'an Men.

Il y a 20 ans, ce même jour, le 13 mai 1989 des centaines de jeune chinois démarrent les premières grèves de la faim sur la place Tian'an Men de Pékin radicalisant les premiers rassemblements qui ont eu leu depuis le 15 avril en mémoire de Hu Yaobang, Sec Gal du PCC décédé le même jour d'une crise cardiaque.

Nous suivions tout cela sur Pékin. Les manifestations ont démarré par des plaintes des étudiants sur leurs déplorables conditions de vie dans les universités avant de les voir aller critiquer ouvertement les autorités chinoises sur la "Place de la Paix Céleste". Exemple de VDO de l'époque http://tinyurl.com/q9kp5r

La Chine n'a pas été la seule à tromper son monde sur les événements sanglants de Pékin. Depuis 1986, depuis Pékin, nous sentions que la tension montait. Trop de différences, trop d'inégalités, trop d'injustices et de désespoir, trop vite. Les premières manifestations de Tian'an Men ont en effet commencé au printemps 86 avec des étudiants étrangers, certains boursiers, de quelques universités chinoises (proches de Haidian) se rendant sur Tian'an Men pour se plaindre des mauvaises conditions d'études et de vie. J'avais alors, comme mes autres voisins étrangers de Pékin, un balcon donnant pile sur les facultés de la jeunesse chinoise.

On a vu la suite, sanglante, honteuse, injustifiable.

Les Pékinois qui n'ont pas besoin qu'on leur montre comment massacrer leurs populations ont néanmoins été "aidé" maladroitement par des puissances étrangères de l'Occident et d'Asie, manipulant les manifestants, agitant les esprits, faisant miroiter des rêves aux gosses qui croyaient avec la Chine de l'ouverture, sous Hu Yaobang et Zhao Ziyang, que la Chine allait moderniser aussi son régime. Cela semblait naturel pour qui vivait les souvenirs impérissables de cette gigantesque fête de la créativité de 1984, 1985, 1986 dans tout Pékin où les artistes avaient toute liberté, vraiment toutes les libertés. Laissant des traces, certes des poussières de liberté, mais pas encore de cendres.

L'un des nombreux casse tête de ce drame parmi "d'autres" lors de ce printemps de Pékin 89 qui a vu des dirigeants du "gouvernement" de Deng Xiaoping faire tirer sans hésitation sur la jeunesse chinoise est de comprendre comment Pékin a été incapable de contrôler les excès et la violence qui s'en est suivie?

J'écris "d'autres" en raison de ces documents sur les violences commises par la troupe et... la foule se révoltant dans les premiers jours de juin contre les forces de sécurité. Lire: "Tiananmen Square, 1989 The Declassified History" (Click sur le titre pour accéder aux documents de la George Washington University)

20 ans...

Aujourd'hui, la RPC, "la Chine", ses gratte ciels orgueilleux et l'honneur de ses JO bien en mémoire, entre dans la grande bataille du commerce mondial, comme Tokyo le fit après 1964, et donc aussi de l'information, mais avec des rêves de géants. La Chine veut voir ses médias rivaliser avec la CNN, BBC, Reuters, ou le New York Times. La Chine se lance, impériale, dans la conquête des esprits avec sa CCTV, Global Times (People's Daily) ou l'agence Xinhua pour (ré)-écrire l'histoire.

C'est beaucoup plus sérieux qu'on ne pourrait le croire depuis Times Square ou les bords de la Seine. L'intention serait pieuse si l'on en connaissait les motifs et avoir la garantie que ces nouveaux géants chinois de la presse ne seront pas que des colosses aux pieds d'argiles comme ces géants effrayants qui défendent les portes des temples bouddhistes d'Asie.

Horrifiants mais... immobiles!

20 années passés depuis ce massacre de Tian'an Men dont les images ont fait le tour du monde. Il est encore difficile de convaincre les esprits libres chinois, et ceux et celles trop affairés par le commerce et l'enrichissement, aveuglés par un nationalisme trop souvent agressif, de regarder en face librement. Il sera encore moins aisé de voir poindre dans l'esprit de ces étranges dirigeants chinois, ce qui accompagne toute forme naturelle de développement et de maturité des esprits, ce qui a été nommé par un emprisonné de Deng Xiaoping, "la 5e modernisation chinoise", celle réclamée par Wei Jingsheng.

La seule et l'unique liberté: La Démocratie.

On Japan war reparations and history issues

Symbol of war and peace by Chinese painter Yi Kai


Following my May 11 post "Tokyo bows to Bataan Death March POWs", I had a dialogue on the Japan US scholars NBR forum to analyze the recent attitude by Tokyo and Washington regarding Japan apologies and compensation to WWII POWs'. Here is the answer of researcher Dr. William Underwood whom I thank for his comments.

Quotes:

"... The Mainichi floated the idea of the Emperor apologizing at Pearl Harbor and Obama apologizing at Hiroshima..."

" The May 10 issue of the Nihon Keizai Shimbun has a sizeable article featuring NBR Japan Forum member Lester Tenney, commander of the POW group “American Defenders of Bataan and Corregidor” (ADBC). The article by staff writer Nakamae Hiroshi describes the two apologies Dr. Tenney recently received in letters from Fujisaki Ichiro, the Japanese ambassador to the U.S. (In response to questioning by the DPJ, the Aso administration also made a recent apology in the Diet to all former POWs; this statement was less specific but more “official” than the letters from the ambassador.)

More importantly, and since I have posted here regarding the frequent mismatch between Japanese apologies and actions, it appears the government of Japan (GOJ) is on the verge of including American POWs and their family members in the Peace, Friendship and Exchange Initiative (PFEI). Hundreds of British and Dutch POWs and family members have made goodwill visits to Japan since the little-publicized reconciliation program began in 1995, but Americans have been excluded. Dr. Tenney has been calling for PFEI participation by Americans for a couple of years now.

Nikkei quotes a “knowledgeable” but unnamed GOJ official as saying the new apologies to the ADBC group represent a “half-step forward.” This implies another half-step may be on the way. A sidebar article is titled "Exchange is the Key to Reconciliation." It quotes Dr. Tenney as saying American POWs want their grandkids to be included in the PFEI too. The following (and final) sentence quotes Ambassador Fujisaki as saying the Japanese government is considering some conciliatory gesture for American POWs.

This is all quite fascinating for reparations watchers and may have relevance for other WWII claims involving Japan (and perhaps the U.S.). One aspect of the lengthy reparations impasse involving Japanese war conduct has been that GOJ and the dozens of still-operating Japanese companies that used wartime forced labor could say to themselves, "If we can get away with resisting demands from American victims (with the blessing of the U.S. government, our closest ally), then we can withstand any pressure from Asian victims." Extending the PFEI reconciliation program, itself basically a spin-off of the 1995 Asian Women’s Fund for former “comfort women,” to Americans may serve to raise the bar (or lower the firewall) for Japan in addressing other claims.

New movement is visible on various fronts. On May 2, somewhat surprisingly, the Asahi reported in Japanese and English that Nishimatsu Construction Co. is now in talks to settle the compensation claim stemming from Chinese forced labor (CFL), even though that claim was rejected by the Japan Supreme Court in its “death-knell” decision of April 2007. Asahi, which treads pretty cautiously these days on WWII matters, says Nishimatsu is preparing to compensate all 360 Chinese workers or family members (not only the actual plaintiffs), although the company has consistently denied all wrongdoing. Mitsubishi Materials Corp., meanwhile, expressed newfound willingness to settle a CFL claim at the Fukuoka High Court last year. Mitsubishi had previously defended itself by aggressively employing historically revisionist arguments, despite the fact that 31 percent of Chinese workers died at one of its Kyushu mines in 1944-45.

Prime Minister Aso, moreover, will have to respond in the near term to the demands for apology and compensation that have been publicly issued by the three Australian survivors of forced labor at Aso Mining. Kyodo, Jiji, AFP, Bloomberg and The Australian all noted these pending demands in reports last month. PM Aso’s POW problem has assisted Dr. Tenney’s claim through “cross-pollination.”

More generally, there are signs that the global reparations trend may be picking up steam again in the age of Obama. The heyday stretched from passage of the Japanese American redress law in 1988 to enactment of the German forced labor compensation fund in 2000, and found expression in myriad ways. (It is noteworthy that the Japanese government and corporations today possess, via the Supreme Court ruling, the all-important “legal immunity” that their German counterparts obtained through complex legal negotiations centrally involving the Clinton administration.) Right up until 9/11, in fact, Congress was poised to assist lawsuits in U.S. courts by American POWs, by blocking the executive branch from interpreting the San Francisco Peace Treaty as having waived rights to file lawsuits. But then the Bush-era “war on terror” tended to place civil liberties and human rights, the soil in which claims for historical justice are rooted, on the back burner
and sent the trend into hiatus.

President Obama is clearly in an apologetic mood, not merely in order to distant himself from President Bush but on grounds of political philosophy, I think. Last summer Nancy Pelosi visited Hiroshima as House speaker; a few weeks back the Mainichi floated the idea of the Emperor apologizing at Pearl Harbor and Obama apologizing at Hiroshima. That might neatly “bookend” the 1941-45 phase of the Asia Pacific War involving the Allied nations. DPJ member Fujita Yukihisa, who has been energetic in his support of Japanese interned in postwar Siberia while also spearheading the Aso POW issue, has indicated that his party will move to proactively resolve history issues if it comes to power."

End of quotes.
Click the title to access the NBR text of Dr. Underwood

Ozawa's resignation: Don't fall for the hype

"I have decided to resign by sacrificing myself for the party to win the upcoming election and bring about a change in regime," said Ichiro Ozawa at a press conference at the party's headquarters in Tokyo. Ozawa emphasized that his resignation is to calm turmoil within the party, and not to take the blame. "My entire aim is to increase party solidarity and strengthen party unity."

DPJ lawmakers and the ruling LDP criticized Ozawa for his handling of a scandal which involved years of contributions from Nishimatsu Construction, a company that had ties to Ozawa's funding raising organization called Rikuzankai.

Selection of Ozawa's successor?

"It will be conducted after Diet deliberations on the supplementary budget draft for fiscal 2009.". Ichiro Ozawa ends his leadership May 13 but won't resign from the Diet.

(Update) Executive members of the main opposition Democratic Party of Japan decided Tuesday to seek to hold a vote Saturday by party parliamentarians to pick a new leader to succeed Ichiro Ozawa, party members said.

Portrait of a (potential) DPJ leader


Okada Katsuya

DPJ deputy leader Katsuya Okada. He is viewed as the most encouraged candidate from Japanese medias who describe him as Mr Clean in spite of some former little problems too such as a lack of charisma and leadership. His father is the founder of Aeon, which in 50 years has become the second largest retailer in the country.

Former METI who joined LDP then "repelled by their corruption" joined DPJ, Okada did well in 2004 and 2005 and could be a key in securing trust with Asian leaders. He is the most likely successor, but he has not yet made an announcement to that effect. His problem: he does not smile enough! He wrote a book: “The Alternation of Political Power Will Change This Country.”

Truly?

About politics, he himself comes from the ranks of bureaucracy, he has this to say in an interview for a Japanese daily last summer:

Q: During this Diet session, there was a continuing stream of revelations about the bureaucracy’s malfeasance. The DPJ has been insisting that Japan extricate itself from its reliance on the bureaucracy?

Okada Katsuya: "Kasumigaseki (the bureaucracy) and the ruling party (LDP) have shared interests, so the LDP can’t move at all, but we have no restraints. Many people sense that the current administration is unsatisfactory and inadequate. We will encourage and support those in the bureaucracy who will work hard."

Q: "What political developments do you see in the future?

Okada Katsuya: "Over the next 10 years, I think the DPJ will form several governments. When that happens, the LDP could fall apart, or reform itself, let a new generation take over, and be reborn as a powerful competitor to the DPJ. I hope they are reborn. The DPJ might become the opposition party through the choice of the people, and might become the ruling party. If we serve as the ruling party twice, then we can say that democracy has taken root in Japan."

Elections, elections, elections

Also in the running are Secretary General Yukio Hatoyama, and acting President Naoto Kan. Now he, Naoto Kan would indeed make political life really in tune with today's world politics and his strength could make Japan behave like an "independent and appealing" power. As Ozawa expects.

It's up to timely strategies for the opposition and the ruling LDP in creating next agenda. Change course for DPJ and begin cooperating with the government especially on the urgent matter of economical and social crisis to ensure that at least some important pieces of legislation are passed?

Coming elections certainly are to be crucial and LDP's camp lost its chance to strike against DPJ after the boss left the conductor's seat. How will DPJ distinguish itself from the LDP and prevent under-ranks' divisions undermining its power to eventually seduce the electorate?

Now one question: Will Aso's led LDP loose next parliament election and therefore the power?

Nothing sure. Still all elements are in the postcard to see a change in power in a normal democracy: an exhausted ruling party mined by scandals and lack of political wit with political power assumed by bureaucracy whose blindness to ordinary people and local cities hardship defeats all imagination. Most important, Japan too is exploded by a world economical crisis. Still LDP rules even with a minor popularity advantage.

"The election, Ozawa said yesterday at his press conference, will be the DPJ's best and biggest chance to realize a change of government.".

Well, well, vote budget first, ideas and politics after.

✍ ✍ ✍ ✍ ✍ ✍

Profile of Okada Katsuya Representative of Mie prefecture

Katsuya Okada 岡田克也, born July 14 1953, is a member of the House of Representatives of Japan, and the former president of the Democratic Party of Japan. A native of Yokkaichi, Mie, (near Osaka and Isé) Okada graduated from the University of Tokyo with a degree in law, and entered the Ministry of International Trade and Industry. He later joined the Takeshita faction of the Liberal Democratic Party, and followed faction leaders Tsutomu Hata and Ichirō Ozawa to join the Japan Renewal Party in 1993. Through a series of splits and mergers, Okada then became a member of the Shinshinto, Sun Party, and Minseito, finally entering the DPJ upon its merger with Minseito in 1998. He became president of the DPJ on May 18, 2004 and led the DPJ to one of its largest electoral victories in history during the 2004 House of Councillors election.

To access his blog, click the title.

Ozawa resigns from leadership of Japanese parliament opposition

Opposition leader Ichiro Ozawa on Monday expressed his intention to step down following the indictment of his top secretary in a political funds scandal that has threatened his party's prospects of winning the next general election, according to a party executive.

When the scandal broke in early March, Ozawa said he would stay on as president of the main opposition Democratic Party of Japan, denying any wrongdoing despite criticism that the incident undermines public trust in politics.

His successor to be announced.

Tokyo bows to Bataan Death March POWs

And then the unexpected happened! Really?
I definitely will have to find more on this.

The Japanese government has extended an apology through its ambassador in the U.S. to former American prisoners of war who suffered in the "Bataan Death March" in the Philippines during World War II, it was learned May 9 [according to the Nikkei May 10, click the title to read the story]

It marked the first time for Japan to apologize specifically to those who survived the infamous march on the Bataan Peninsula, which resulted in numerous deaths. The commander of the group representing POWs said, "It took a long time, but I am glad to hear a formal apology from the Japanese government."

The POW group is called "American Defenders of Bataan and Corregidor," and led by Commander Lester Tenney, 88, a professor emeritus at Arizona State University. The group is scheduled to disband by the end of this month due to aging of the members.


"It was pretty rough to watch," Tenney says of the brutal torture during the Bataan Death March (in a Japanese photo)

The apology was extended in the letter by Japan's ambassador to the U.S., Ichiro Fujisaki, based in Washington, D.C. Fujisaki said in the letter to Tenney last December, "We extend a heartfelt apology for our country having caused tremendous damage and suffering to many people, including those who have undergone tragic experiences in the Bataan Peninsula and Corregidor Island in the Philippines." In February, Fujisaki sent another letter, which said, "What we informed you in the previous letter is the result of careful consideration, and it reflects fully the Government of Japan's position."

In 1999, Tenney sued Japanese companies that used him and other POWs as slave labor during the war. The U.S. Supreme Court in 2003 dismissed his case, noting that the U.S. waived the right to claims under the San Francisco Peace Treaty with Japan. But, Tenney says, "Moral responsibility of those companies remains." He is still waiting to hear an apology from them.

"December 8 1941, Luzon, Philippines — Within hours of the surprise attack on Pearl Harbor the first waves of Japanese aircraft attack Clark Airfield north of Manila, the Philippine capital. They are met by fierce antiaircraft fire from New Mexico's 200th Coast Artillery (AA). The Guardsmen are credited with destroying at least two enemy aircraft in this attack. In April 1942, due to most of the troops suffering from illness plus a lack of food and ammunition, the unit, along with all remaining American and Filipino forces still fighting on the Bataan Peninsula, was compelled to surrender. The men were lead into captivity as part of the infamous "Bataan Death March." Those soldiers who survived the march remained prisoners of war for the next three years."

I met and accidentally worked a while with Hampton Sides in Tokyo while he was spending months in Japan to write his book on Bataan Death March helped by a very close person of mine at Foreign Press Center, in Kasumigaseki, Tokyo. Actually I introduced Hampton to Lester Tenney and his son at an event on Taiwanese comfort women that was organized in Tokyo early 2000s'. His resume on the publisher mentions Hampton Sides is a native of Memphis, worked as editor at large for Outside magazine and the author of the international best-seller, Ghost Soldiers (Doubleday), which was the basis for the 2005 Miramax film, The Great Raid. Ghost Soldiers won the 2002 PEN USA award for non-fiction and the 2002 Discover Award from Barnes & Noble, and his magazine work has been twice nominated for National Magazine Awards for feature writing. Hampton is also the author of Americana (Anchor) and Stomping Grounds (William Morrow). A graduate of Yale with a B.A. in history, he lives in New Mexico.


Hampton Sides

Ghost soldiers: the forgotten epic story of World War II's most dramatic mission
By Hampton Sides
ISBN 0385495641, 9780385495646

The Economist: "Jean-Baptiste Colbert règne de nouveau à Paris"

Fancy Frenchy Chic?

Si The Economist le dit, japonais, chinois et coréens
pourraient aussi s'en inspirer. "Revenge?" "Non, just
a fact!" European economies are better managed. Catch
a TGV hi-speed train, get medical and health service,
improve your demographics, enjoy " la joie de vivre".
This is "La revanche du modèle français" clame
l'hebdomadaire britannique The Economist dans son
édition datée du 7 Mai. En attendant le prochain coup
de griffe de la perfide Albion, un regard sur ce
papier made in London:

Citations

"For years leaders in continental Europe have been told by the Americans, the British and even this newspaper that their economies are sclerotic, overregulated and too state-dominated, and that to prosper in true Anglo-Saxon style they need a dose of free-market reform. But the global economic meltdown has given them the satisfying triple whammy of exposing the risks in deregulation, giving the state a more important role and (best of all) laying low les Anglo-Saxons.

At the April G20 summit in London, France’s Nicolas Sarkozy and Germany’s Angela Merkel stood shoulder-to-shoulder to insist pointedly that this recession was not of their making. Ms Merkel has never been a particular fan of Wall Street. But the rhetorical lead has been grabbed by Mr Sarkozy. The man who once wanted to make Paris more like London now declares laissez-faire a broken system.

Jean-Baptiste Colbert once again reigns in Paris. Rather than challenge dirigisme, the British and Americans are busy following it: Gordon Brown is ushering in new financial rules and higher taxes, and Barack Obama is suggesting that America could copy some things from France, to the consternation of his more conservative countrymen. Indeed, a new European pecking order has emerged, with statist France on top, corporatist Germany in the middle and poor old liberal Britain" floored.

L'économie, performances des modèles étatiques

"The downturn has also confirmed that the continental model has some strengths. France has a comparatively efficient public sector, thanks in part to years of investment in better roads, more high-speed trains, nuclear energy and even the restoration of old cathedrals. Nor is it just a matter of pumping in ever more taxpayers’ cash. By any measure France’s health system delivers better value for money than America’s costlier one. Germany has not just looked after its public finances more prudently than others; its export-driven model has forced its companies to hold down costs, making them competitive not only in Europe but also globally."

La palme a Nicolas Sarkozy écrit The Economist

"... il a été en partie élu Président de la France en expliquant que le modèle français était moribond, et en vantant les louanges des modèles britannique et américain. C'est le même homme qui a pris la tête de croisade contre le laisser-faire capitaliste".

Demain, quels risques?

« Les points forts qui donnent plus de résistance à l'Europe continentale en temps de récession, pourraient se transformer en faiblesses dans le rebond. Car il y a un prix à payer pour plus de sécurité et plus de protection de l'emploi : moins de souplesse et d'innovation qui signifient, à plus long terme, moins de croissance. (…) Les Etats-Unis et la Grande-Bretagne pourraient sortir de la récession plus vite que la majeure partie de l'Europe continentale. »

Pragmatisme de rigueur

"Getting regulation right matters as much as freeing up markets; an efficient public sector may count as much as an efficient private one; public investment in transport, schools and health care, done well, can pay dividends. The pecking order may change, but pragmatism and efficiency will always count."

Click sur le titre pour accéder au papier de l'Economist de Londres.


Toujours dans des revues cet autre regard sur la crise économique et financière avec le Dr. Robert Madsen dans Foreign Affairs Mai Juin 2009. "Comparing Crises. Is the Current Economic Collapse Like Japan's in the 1990s?" [www.foreignaffairs.com]

Quotes:
"The extra capital generated in East Asia and the developing world was amplified by largely unregulated financial innovation and increases in leverage -- a pattern that recalls Japan's experience in the 1980s. The money poured into the most liberalized markets, including the real estate sectors in Australia, Spain, the United States, and the United Kingdom. Households in those countries then used the appreciation in the value of their homes to finance additional consumption, effectively absorbing the surplus liquidity and providing the demand necessary to propel global GDP growth.

In 2007-9, this ultimately unsustainable pattern started to unravel...

... What actually happened, however, was a more harmful resolution of the imbalances, one affecting exclusively the import side of the ledger. The adjustment started when trouble manifested in the U.S. subprime market, revealing that a range of financial institutions in the United States, Europe, and elsewhere had assumed dangerously large volumes of debt. Like their counterparts in Japan in the 1990s, these firms reacted by selling assets and calling in loans. As the value of market securities began to erode, other lenders saw their balance sheets deteriorate and decided that they, too, needed to raise cash. The resulting wave of asset sales has so far wiped out close to $15 trillion in U.S. wealth alone, which has caused consumers to expand their savings several fold..."

Robert MADSEN is a Senior Fellow at the MIT Center for International Studies.