Trade Wars Are Coming History matters. But not central bankers and other mandarins of finance. The haunting memories of the terrible policy mistakes that turned what should have been a sharp economic downturn into the Great Depression is driving the financial elite to contain the crisis in Asia.
Money is no object.
The long-term fallout is another matter. It will take years to get rid of crony capitalism, slash bloated bureaucracies, and open up the political systems in many East Asian nations, for instance. The U.S. trade deficit will soar as our exports to East Asia decline and our imports from East Asia rise. Trade conflict is inevitable. The recent battle over granting President Clinton new authority to negotiate free trade deals is a precursor of the bruising battles that lie ahead.