People complain about the weather all the time, but no one does anything about it. So it goes with the potential economic storm that will be generated by the inevitable adjustment of global imbalances.

We are told repeatedly that the US current account deficit is unsustainable, that the US housing bubble and government deficits bring the day of reckoning closer and that underlying protectionist pressures imperil the Doha round of trade negotiations, if not the entire trading system. The recommended policy responses are limited to those that would simply bring on the adjustment – contraction of US domestic demand, direct political conflict with agricultural interests, a sharp dollar decline, rising interest rates – a little bit earlier and perhaps only a little less severely.