S.Korean President, Lee Myung-Bak signs off FTA with US

President Lee Myung-Bak (pictured) on Tuesday signed off on a package of bills needed to implement S.Korea's free trade agreement with the US after it sailed through the US Congress last month. The signing means Seoul is now ready to enter final negotiations with Washington before the FTA takes effect as early as January.

AFP - President Lee Myung-Bak on Tuesday signed off on a package of bills needed to implement South Korea's free trade agreement with the United States after it sailed through the US Congress last month.
The signing, a week after the trade pact and 14 related bills passed through parliament, means Seoul is now ready to enter final negotiations with Washington before the FTA takes effect as early as January.
Business groups have hailed the deal as opening a new era for Asia's fourth-largest economy, but opponents fear damage to domestic businesses.

"The FTA is to open up the US market, the biggest market in the world," Lee said during a signing ceremony at the presidential Blue House.

"Let's take good advantage of the Korea-US FTA when prospects of the economy and exports are dim," he said, according to Yonhap news agency.

Lee also called for measures to help farmers and small businesses expected to be hit by the changes.
The 14 related bills include revisions to copyright, patent, customs and other domestic laws, making them compatible with the trade pact.

Seoul and Washington will enter final talks next month covering the compatibility of any outstanding laws and regulations with the FTA, Yonhap said, with the two sides hoping it will come into effect on
January 1.

South Korea can expect a boost in exports. But analysts say the main gain will be improved investment conditions, making the country more attractive for foreign investment and foreign services providers.
Export-dependent South Korea already has free trade deals with the European Union, India, 10 Southeast Asian nations and several other states
.

Soros: Financial Crisis Stems from super Bubble

George Soros, like me, is no believer in "equilibrium economics". Rather he believes that sometimes we will see an equilibrium, but that it will be short-lived. Like Hyman Minsky, Soros argues that stability will itself sow the seeds of the next instability. Soros says we are in a unique place with our current crisis, experiencing both inflation and a recession at the same time. Hear/read more from Soros on today's NPR Morning Edition, Financial Crisis Stems from Super Bubble:

… Soros blames what he calls a "super-bubble" that started about 25 years ago. That's when a less-is-more philosophy became popular with economic regulators. That allowed Wall Street to invest increasing amounts of money in credit.

"The idea was that regulators always make mistakes, state interference in the markets just messes things up," Soros says. "And that was a false idea .... Regulators are human and bound to make mistakes, but markets are also human and they are also bound to make mistakes. Instead of markets always being right, they're actually always groping at trying to find out what the facts are. But they never get it right." …

Soros says there's a "super-bubble" in the economy that's bigger than just the recent housing crises, and he blames exotic financial instruments for helping cause it.

"The markets have introduced financial instruments with fancy names — CDOs and CLOs and all these strange instruments that are traded in very large volumes. And they were all constructed on the belief deviations are random.

Soros also has a new book out. Here is a snip from the introducion:

A New Paradigm for Financial Markets, Introduction, George Soros: We are in the midst of the worst financial crisis since the 1930s. In some ways it resembles other crises that have occurred in the last twenty-five years, but there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process; the current crisis is the culmination of a super-boom that has lasted for more than twenty-five years.

To understand what is going on we need a new paradigm. The currently prevailing paradigm, namely that financial markets tend towards equilibrium, is both false and misleading; our current troubles can be largely attributed to the fact that the international financial system has been developed on the basis of that paradigm.

The new paradigm I am proposing is not confined to the financial markets. It deals with the relationship between thinking and reality, and it claims that misconceptions and misinterpretations play a major role in shaping the course of history. …

Let me explain briefly how the theory of reflexivity applies to the [current] crisis. Contrary to classical economic theory, which assumes perfect knowledge, neither market participants nor the monetary and fiscal authorities can base their decisions purely on knowledge. Their misjudgments and misconceptions affect market prices, and, more importantly, market prices affect the so-called fundamentals that they are supposed to reflect. Market prices do not deviate from a theoretical equilibrium in a random manner, as the current paradigm holds. Participants' and regulators' views never correspond to the actual state of affairs; that is to say, markets never reach the equilibrium postulated by economic theory. There is a two-way reflexive connection between perception and reality which can give rise to initially self-reinforcing but eventually self-defeating boom-bust processes, or bubbles. Every bubble consists of a trend and a misconception that interact in a reflexive manner. There has been a bubble in the U.S. housing market, but the current crisis is not merely the bursting of the housing bubble. It is bigger than the periodic financial crises we have experienced in our lifetime. All those crises are part of what I call a super-bubble—a long-term reflexive process which has evolved over the last twenty-five years or so. It consists of a prevailing trend, credit expansion, and a prevailing misconception, market fundamentalism (aka laissez-faire in the nineteenth century), which holds that markets should be given free rein. The previous crises served as successful tests which reinforced the prevailing trend and the prevailing misconception. The current crisis constitutes the turning point when both the trend and the misconception have become unsustainable. …

Top 10 Reasons George Soros Is Dangerous

So! as much as i became so much interested in George Soros, here are some negative views on George Soros.

uman Events’ readers, in an online poll,recently voted billionaire financier George Soros “the single most destructive leftist demagogue in the country.”  Here are the Top 10 Reasons George Soros Is Dangerous:

1.  Gives billions to left-wing causes:  Soros started the Open Society Institute in 1993 as a way to spread his wealth to progressive causes.  Using Open Society as a conduit, Soros has given more than $7 billion to a who’s who of left-wing groups.  This partial list of recipients of Soros’ money says it all: ACORN, Apollo Alliance, National Council of La Raza, Tides Foundation,Huffington Post, Southern Poverty Law Center, Soujourners, People for the American Way, Planned Parenthood, and the National Organization for Women.

2.  Influence on U.S. elections:  Soros once said that removing President George W. Bush from office in 2004 was the "central focus of my life."  He put his money where his mouth is, giving $23.58 million to various 527 groups dedicated to defeating Bush.  His early financial support helped jump-start Barack Obama’s political career.  Soros hosted a 2004 fund-raiser for Obama when he was running for the Illinois Senate and gave the maximum-allowed contribution within hours of Obama’s announcement that he was running for President.

3.  Wants to curtail American sovereignty:  Soros would like nothing better than for America to become subservient to international bodies.  He wants more power for groups such as the World Bank and International Monetary Fund, even while saying the U.S. role in the IMF should be “downsized.”  In 1998, he wrote:  “Insofar as there are collective interests that transcend state boundaries, the sovereignty of states must be subordinated to international law and international institutions.”

4.  Media Matters:  Soros is a financial backer of Media Matters for America, a progressive media watchdog group that hyperventilates over any conservative view that makes it into the mainstream media.  Now its founder, David Brock, has openly declared war on Fox News, telling Politico that the group was mounting “guerrilla warfare and sabotage” against the cable news channel, and would try to disrupt the commercial interests of owner Rupert Murdoch—an odd mission for a 501(c)(3) tax-exempt educational foundation that is barred from participating in partisan political activity.

5.  MoveOn.org:  Soros has been a major funder of MoveOn.org, a progressive advocacy group and political action committee that raises millions for liberal candidates.  This is the group that had on its website an ad comparing President George W. Bush to Adolf Hitler and ran the infamous “General Betray Us” ad in the New York Times, disparaging the integrity of Gen. David Petraeus.

6.  Center for American Progress:  Headed by John Podesta, White House chief of staff under President Clinton, the Center for American Progress has been instrumental in providing progressive talking points and policy positions for the Obama administration.  There has also been a revolving door between the White House and the Soros-funded think tank, with Obama staffing his administration with many CAP officials.

7.  Environmental extremism:  Former Obama green jobs czar Van Jones and his leftist environmental ideas have been funded by Soros’ money at these groups: the Ella Baker Center, Green For All, the Center for American Progress, and the Apollo Alliance, which was instrumental in getting $110 billion in green initiatives included in Obama’s stimulus package.  Soros also funds the Climate Policy Initiative to address global warming and gave Friends of the Earth money to “integrate a climate equity perspective in the presidential transition.”

8.  America Coming Together:  Soros gave nearly $20 million to this 527 group with the express purpose of defeating President Bush. A massive get-out-the-vote effort, ACT’s door-to-door canvassing teams included numerous felons, its voter registration drives were riddled with fraud, and it handed out incendiary fliers and made misleading taped phone calls to voters.  ACT was fined $775,000 by the Federal Election Commission for violations of various federal campaign finance laws.

9.  Currency manipulation:  A large part of Soros' multibillion-dollar fortune has come from manipulating currencies.  During the 1997 Asian financial crisis, Malaysian Prime Minister Mahathir bin Mohamad accused him of bringing down the nation’s currency through his trading activities, and in Thailand he was called an “economic war criminal.”  Known as “The Man who Broke the Bank of England,” Soros initiated a British financial crisis by dumping 10 billion sterling, forcing the devaluation of the currency and gaining a billion-dollar profit.

10.  Delusions:  Soros has repeatedly said that he sees himself as a messianic figure.  Who but a megalomaniac would make these comments?  “I admit that I have always harbored an exaggerated view of my self-importance—to put it bluntly, I fancied myself as some kind of god” or “I carried some rather potent messianic fantasies with me from childhood, which I felt I had to control, otherwise I might end up in the loony bin.”  If only the loony bin were an option.  As it is, one of the wealthiest men in the world is using his billions to impose a radical agenda on America.

The new paradigm for financial markets by GEORGE SOROS

The new paradigm for financial markets: the credit crisis for 2008 and what it mean BY GEORGE SOROS


This is the book i'm going for my IB book report, and im actually enjoying reading it.
he's got some interesting points.
maybe you wanna check it out as well! :)


Soros Explains The Credit Crisis

The New Paradigm for Financial Markets: The Credit Crisis of 2008 And What It Means by George Soros ($23, Public Affairs, 2008).
With his near real-time critique of the credit crisis, George Soros has saved financial historians a lot of work. If he's right, the summer of 2007 and all of 2008 will be the topic of many an academic paper, much like how Ben Bernanke made a career out of studying the Great Depression. Soros sees this as a monumental time. It's not just a bursting housing bubble, he says. It's the end of a quarter-century of credit-driven economic expansion. We're in a whole new world.
Up until August 2007, Soros had mostly farmed out management of his hedge fund to outsiders so that he could devote his time to philanthropy, philosophy and politics. The first troubles in subprime spurred Soros back into the markets. This time his goal wasn't so much to find the next billion-dollar trade but to preserve the wealth of his foundations.
This market has been so tough that it's vexed even Soros. His book offers a broad trading diary from January 2008 through the end of March, when The New Paradigm went to the printer. Soros' investment plan was to "short U.S. and European stocks, U.S. 10-year government bonds and the U.S. dollar; long Chinese, Indian and Gulf States stocks and non-U.S. currencies."
On March 10, he noted that commodities were stronger than he thought they'd be, that the Federal Reserve acted more aggressively than he'd anticipated and that the Indian and Chinese stock markets, not quite decoupled from the U.S. economy, took major hits. On March 16, he observed that "The panic is palpable," and bought into ailing Bear Stearns (nyse: BSC - news - people ), expecting some return on a Federal Reserve brokered auction of the company. He got burned admitting that, "We forgot to take into account that Bear is disliked by the establishment, and the Fed would use the occasion to deal with a moral hazard by punishing shareholders."
For those who might be confused by Soros' analysis there, Bill Miller, manager of the Legg Mason Value Trust explains: "Bear had been very aggressive in seizing the capital of Askin Capital in 1994 and precipitating its failure. In 1998 it opted out of rescuing Long Term Capital Management. That's the kind of thing where, if you're Merrill, Citigroup or the Fed, you remember." Miller also bought shares in Bear, for the same reasons Soros did.
The trading diary ends with Soros losing money. While he wishes he could have reached a more triumphant ending, he notes that the result "may be more appropriate for the purposes of the book."
Indeed, it is. While Soros is investing actively again, he's really using the market as a laboratory where he can test his philosophical ideas, especially the notion of reflexivity--that no market participant can ever have perfect knowledge because their beliefs, and the beliefs of others, effect and distort the markets. Because investors tend to herd--they buy things that are going up and sell things that are going down--markets are constantly beset by bubbles. Irrationality reigns supreme.
Soros was once a student of the philosopher Karl Popper, who spent most of his time studying science. Popper came to the conclusion that all scientific statements must be falsifiable and that no scientific theory is ever absolutely true. They are just able to withstand people's attempts to prove them wrong. So long as a theory isn't falsified, it's as good as true. But we're 100% certain about nothing.
The turmoils we see in the markets reflect the turmoils of human thought. The implications of this go far beyond investing. It means that market fundamentalism, the idea that markets are always self-correcting and don't need regulation, is just wrong. Markets are flawed because they reflect human delusions of certainty. Banks make money by issuing loans. If they want to make more money, they need to issue more loans. Absent regulation to stop them, the banks will issue new loans in new ways. They rationalize the risk away by building models based on past experience. The risk models say that the loans are safe. The flaw? All of these new loans fuel an unprecedented housing bubble that the risk models, which are backward looking, can't account for. All of these new loans also create new levels of debt, also unprecedented in history. So the risk models, once again, miss them.
It's time, says Soros, to bring back some of the regulations that were put in place after the Great Depression and then eroded in the decades that followed. Leverage and credit creation, he says, need to be reigned in. Regulators need to start looking to control asset bubbles as they manage the economy for the more usual goals of full employment and price stability.
Soros sees a new economy, indeed a new world order emerging. If the U.S. leaves its fate to the whims of flawed markets, it will lose much of its worldwide influence. Without the dollar as the reserve currency of first choice, the U.S. really has nothing but military supremacy in order to defend its position in the world, and even that, says Soros, has been undermined by the debacle in Iraq.
Soros' message for citizens, investors, politicians and regulators is to approach this new economy and new political order with humility. Be flexible and never dogmatic. Strive to find truth while realizing it's unattainable. It's false certainty that trips us up, in both investing and life.

MF global: Good Bets, Good Timing?

The graves of Wall Street, it has long been said, are filled with those who were right too soon.

And so it may be. But even it proves to play out just as Mr. Corzine forecasted, it won’t do MF, or Mr. Corzine’s reputation, any good.

The great irony of the failure of MF Global, the firm run by Jon Corzine, the former governor of New Jersey and the former chief executive of Goldman Sachs, is that its bets will, in the long run, probably turn out to have been good ones. He is said to have bet large sums that Europe would not let countries like Italy and Spain default. If that was right, then the elevated interest rates available on government bonds represented a phenomenal bargain.

Whatever is going to happen in the future, in the present sovereign bond prices have been sliding.

An unleveraged investor could have ridden out the current downturn, but MF, as is the fashion on Wall Street, was heavily leveraged. Its June 30 balance sheet showed $44.4 billion of liabilities and only $1.4 billion of equity. The firm was heavily dependent on short-term funding, with less than half a billion in long-term debt. That meant the firm was vulnerable if the value of its holdings fell, or if its lenders simply got nervous and demanded more collateral to back the loans.

Some combination of that may have happened.

There are a couple of obvious questions. Did MF take risks that were too large or too concentrated? Risk officers are supposed to keep that from happening, but when the chief executive is the trader that is not easy to do. Were there margin calls that MF deemed unreasonable? Will it complain about its lenders? Wouldn’t it be fun if Mr. Corzine blamed Goldman for his problems?

This is a reminder of the wisdom of the Volcker Rule. Let gambling be done by those that cannot call on the Federal Deposit Insurance Corporation or the Treasury for a bailout, and by those that do not have access to low-cost insured deposits.

It is also a reminder that liquidity can be a fair-weather thing. It was only a week ago that we were hearing that MF had all kinds of available liquidity. Now it has filed for bankruptcy protection.http://dealbook.nytimes.com/2011/10/31/mf-global-files-for-bankruptcy/?ref=business

Economy Beats Expectations in August

The Canadian economy grew by 0.3 per cent in August, the third consecutive monthly gain.

Statistics Canada said Monday that much of the gains came from the strong energy sector, where output advanced by 2.8 per cent. Excluding that, real GDP was unchanged.

The finance and insurance sector rose by 1.4 per cent. A higher volume of trading on the stock exchanges, partly a result of financial markets reacting to concerns over the debt situation in some countries, led the increase.

Overall, economists had been expecting slightly weaker growth of 0.2 per cent.

The comparatively strong showing suggests the threats to the economy that emerged over the summer (namely the U.S. debt ceiling crisis, and the sovereign debt problem in Europe) weren't enough to derail Canada's economy.

Assuming September shows no gain, Scotiabank's economics team noted in a report Monday that the economy seems on track to post a 2.7 per cent annualized gain in the third quarter as a whole. That's ahead of the 2.0 per cent the Bank of Canada is expecting.

Canada's economy would have to shrink by 0.5 per cent in September to match the Bank of Canada forecast.

Rothschild family

The Rothschild family is a European family of German Jewish origin that established European banking and finance houses starting in the late 18th century. It has been argued that during the 19th century, the family possessed by far the largest private fortune in the world as well as by far the largest fortune in modern world history. The book “Currency war” which I read during the summer basically describes Rothschild family’s effect on world’s most significant histories. And the book argues that the world war I, and II, The American Civil war, the numerous deaths of American presidents are all related to the conspiracy of Rothschild family.

Historian Paul Johnson writes that the Rothschilds are elusive. There is no book about them that is both revealing and accurate. Libraries of nonsense have been written about them. For this the family is largely to blame." A woman who planned to write a book entitled Lies about the Rothschilds abandoned it, saying: "It was relatively easy to spot the lies, but it proved impossible to find out the truth. The family is highly secretive... They kept no more documentation than was necessary. They systematically destroyed their papers." He also notes that this was understandable, since they were private bankers and had confidential relations with several governments and innumerable powerful individuals. They were Jews, and particularly concerned that details could be used to promote anti-Semitism. Their latest historian, Miriam Rothschild, believes another reason was that they kept no muniment room. The Rothschilds were not interested in their history, but were respectful towards their ancestors, as a matter of good form; they prudently thought about the future, but lived for the present.

"All the same," Johnson writes, "the salient facts about the Rothschilds are clear enough. They were a product of the Napoleonic Wars, just as the first phase of large-scale Jewish finance was a product of the Thirty Years War, and for the same reason: in wartime, Jewish creativity comes to the fore and gentile prejudice goes to the rear. In all essentials, the family fortune was created by Nathan Mayer Rothschild in London." He notes that prior to the beginning of the revolutionary wars in France, in the mid-1790s, European merchant banking was dominated by non-Jews, including the "Barings of London, the Hopes of Amsterdam and theGebrüder Bethmann of Frankfurt". The financial demands of war quickly expanded the money-raising market and so opened room for newcomers, including a German-Jewish group with the Oppenheims, Rothschilds, Heines, and Mendelssohns among them.



The Rothschilds already possessed a very significant fortune before the start of Napoleonic Wars (1803–1815), and the family had gained preeminence in the bullion trade by this time. From London in 1813 to 1815, Nathan Mayer Rothschild was instrumental in almost single-handedly financing the British war effort, and the French war effort, financing the shipment of bullion to the Duke of Wellington's armies across Europe, as well as arranging the payment of British financial subsidies to their Continental allies. In 1815 alone, the Rothschilds provided £9.8 million (£694m in today's money) in subsidy loans to Britain's continental allies.



The brothers helped co-ordinate Rothschild activities across the continent, and the family developed a etwork of agents, shippers and couriers to transport gold across war-torn Europe. The family network was also to provide Nathan Rothschild time and again with political and financial information ahead of his peers, giving him an advantage in the markets and rendering the house of Rothschild still more invaluable to the British government. In one instance, the family network enabled Nathan to receive in London the news of Wellington's victory at the Battle of Waterloo a full day ahead of the government's official messengers.

Rothschild's first concern on this occasion was to the potential financial advantage on the market which the knowledge would have given him; he and his courier did not immediately take the news to the government. See a partisan French pamphlet in 1846 by John Reeves in 1887 in The Rothschilds: the Financial Rulers of Nations. It was then repeated in later popular accounts, such as that of Morton

The basis for the Rothschild's most famously profitable move was made after the news of British victory had been made public. Nathan Rothschild calculated that the future reduction in government borrowing brought about by the peace would create a bounce in British government bonds after a two year stabilisation, which would finalise the post-war re-structuring of the domestic economy. In what has been described as one of the most audacious moves in financial history, Nathan immediately bought up the government bond market, for what at the time seemed an excessively high price, before waiting two years, then selling the bonds on the crest of short bounce in the market in 1817 for a 40% profit. Given the sheer power of leverage the Rothschild family had at its disposal, this profit was an enormous sum.

Nathan Mayer Rothschild initially started his business in Manchester England in 1806, and gradually moved it to London, where in 1809 he acquired the location at 2 New Court in St. Swithin's Lane, City of London,where it operates today; he established N. M. Rothschild and Sons in 1811. In 1818, he arranged a £5 million loan to thePrussian government, and the issuing of bonds for government loans formed a mainstay of his bank’s business. He gained a position of such power in the City of Londonthat by 1825–6 he was able to supply enough coin to the Bank of England to enable it to avert a market liquidity crisis.

Ascent of money

I finally chose a book for the book review of my International business class! 

“Ascent of money” written by Niall Ferguson talks about the history of world’s financial market and how it yielded in the first place. Ferguson first came to notice a decade ago with “The Pity of War,” a revisionist tour de force arguing that Britain made a world-historical error by entering World War I (and thereby destroying its empire) when it should have simply waited out the swift German conquest of Europe and remained a superpower, with Europe the better for it. More recently the Scottish-born Ferguson, who now spends half the year teaching at Harvard and the other half at Oxford, has turned his attention to the prodigal young heir to the British imperial crown, the United States. In “The Cash Nexus” (2001) and “Colossus” (2004), he urged Americans to emerge from their self-denial and fulfill their obvious destiny as the next “liberal” empire spreading the light of democracy and Anglo-­Saxon legalism across the globe. “The greatest disappointment facing the world in the 21st century,” Ferguson concluded in “The Cash Nexus” (published in the opening months of the Bush presidency), is that “the leaders of the one state with the economic resources to make the world a better place lack the guts to do it.” Ferguson later supported the Iraq war as evidence that Washington had finally gotten up its courage, imperially speaking.

Whatever one thinks of his arguments, it’s impossible to ignore Niall Ferguson. He’s like the brightest kid in the debating club, the one who pulls all-nighters in the library and ferrets out facts no one thought to uncover. And in his latest book, “The Ascent of Money” — humbly subtitled “A Financial History of the World” — Ferguson takes us on an often enlightening and enjoyable spelunking tour through the underside of great events, a lesson in how the most successful great powers have always been underpinned by smart money. “The ascent of money has been essential to the ascent of man,” he writes, making a conscious reference to the BBC production he loved as a boy, Jacob Bronowski’s “Ascent of Man.” (In fact, like Ferguson’s three previous books, “Colossus,” “Empire” and “The War of the World,” “The Ascent of Money” was written as a companion to a TV documentary series.)

“Behind each great historical phenomenon there lies a financial secret,” Ferguson says. He goes into fascinating detail about how “it was Nathan Roth­schild as much as the Duke of Wellington who defeated Napoleon at Waterloo” by selling bonds and stockpiling gold for the British Army. The richest bankers on the Continent in the 19th century, the Rothschilds became known as die Finanzbonaparten (the Bonapartes of finance). And, as Ferguson argues, they also played a crucial part in the South’s defeat in the Civil War by declining to invest in Confederate cotton-­collateralized bonds. Imperial Spain amassed vast amounts of bullion from the New World, but it faded as a power while the British and Dutch empires prospered because they had sophisticated banking systems and Spain did not. Similarly, the French Revolution was made all but inevitable by the machinations of an unscrupulous Scotsman named John Law, whom the deeply indebted French monarchy recklessly placed in charge of public finance. “It was as if one man was simultaneously running all 500 of the top U.S. corporations, the U.S. Treasury and theFederal Reserve System,” Ferguson writes. Law proceeded to single-handedly create the subprime mortgage bubble of his day. When it collapsed, the fallout “fatally set back France’s financial development, putting Frenchmen off paper money and stock markets for generations.” Wilhelmine Germany, meanwhile, came up short in World War I because it “did not have access to the international bond market,” Ferguson writes. Every one of these episodes sounds like a warning shot: Will America be the next great power to fall because of unsound finance?

The question is particularly pressing in the midst of what is widely seen as the worst financial crisis since the Great Depression. And Ferguson’s conclusions are troubling. Only a few years after accusing Washington of “imperial understretch” for failing to flex its muscles — and without any hint of irony — Ferguson now argues that the United States may be succumbing to financial overstretch. Deeply in debt to the rest of the world, it has become part of a “dual country” that he calls “Chimerica.” “In effect, the People’s Republic of China has become banker to the United States of America,” he writes. Until the current global financial crisis, this seemed to be a fairly reliable relationship. American consumers over-bought goods and over-borrowed from China, and the Chinese in turn accumulated huge dollar surpluses that they plowed back into Wall Street investments, thereby supplying profligate Americans with the financing we needed to consume and sustain ourselves as the lone superpower. “For a time it seemed like a marriage made in heaven,” Ferguson writes. “The East Chimericans did the saving. The West Chimericans did the spending.”

Suddenly, however, it’s looking more like a marriage made in hell. According to Ferguson, much of the current crisis stems from this increasingly uneasy symbiosis. It turns out “there was a catch. The more China was willing to lend to the United States, the more Americans were willing to borrow.” This cascade of easy money, he argues, “was the underlying cause of the surge in bank lending, bond issuance and new derivative contracts that Planet Finance witnessed after 2000. . . . And Chimerica — or the Asian ‘savings glut,’ as Ben Bernanke called it — was the underlying reason why the U.S. mortgage market was so awash with cash in 2006 that you could get a 100 percent mortgage with no income, no job or assets.” Going forward, the system seems likely to be increasingly unstable, as Treasury Secretary Henry Paulson suggested recently when he warned that unless fundamental changes are made, “the pressure from global imbalances will simply build up again until it finds another outlet.”

Previous periods of global stability and peace had relied on judicious mechanisms like the Congress of Vienna or the Bretton Woods agreements. Now the international system — and America’s position within it — has come to depend on what looks more like a global Rube Goldberg machine running on hot money. And though Ferguson doesn’t come out and say it, the Chinese may now have the upper hand in this chimerical Chimerica. While so far it’s worked in Beijing’s interest to under­write America’s rampant consumerism — because we buy so many of their goods — the Chinese also have the option of recycling some of their surplus billions into their own huge population. We, on the other hand, don’t have the option not to borrow from them. Indeed, it’s no secret on Wall Street and in Washington that the real targets of President Bush’s $700 billion bailout plan were the foreign funds, including “sovereign wealth funds,” that keep America’s financial system afloat. Unless these foreign financiers — principally China and Japan — get reassurance that the global financial system can function properly again, Ameri­ca’s long period of growth and power may be coming to a close.

Perhaps, then, the conclusion should be that Americans need to flex our muscles less as an empire and fight a little harder for fiscal sobriety and balance in our foreign policy. To be fair, Ferguson was early in seeing that America’s fiscal problems were serious. In “Colossus,” he warned presciently of America’s increasing reliance on Chinese capital, although he argued then that we should be mainly worried about domestic entitlements like Medicare and Social Security — indicating that he, like the Bush administration, seriously underestimated the ultimate cost of the Iraq war.

As with Ferguson’s three previous documentary efforts, “The Ascent of Money” sometimes feels as if it were laid out like a shooting script. Ferguson will depart from an exegesis on the 17th century or the Great Depression to pop up in post-Katrina New Orleans or Memphis (for a report on bankruptcies), and we surmise it’s to record another on-scener for PBS. The book, whose main text comprises a scant 360 pages (a light effort for Ferguson, especially considering the ambitious subtitle), is also reductionist at times. Is it really fair to say Chimerica is mainly at the root of our current problems? (A lack of oversight and regulation of the subprime mortgage market here at home had a lot to do with it as well.) China’s backwardness between the 1700s and 1970s was largely due to its dearth of financial innovation, he suggests, but other historians have pointed equally to the absence of technological innovation of the kind that arose in Europe’s close-quartered patchwork of states because of repeated wars.

And in the end, as Ferguson himself seems to acknowledge, the scope of the financial crisis that is plaguing the world today calls into question the book’s premise — that the “trajectory” of finance through history, while “jagged and irregular,” is “unquestionably upwards.” Our increasingly sophisticated finance clearly contains self-destructive tendencies, and its very complexity may have become our undoing. Ferguson wonders whether the cruel realities of biological evolution are the model for what is happening now. Contemplating the financial Armageddon that has devastated Wall Street and set back globalization, he asks: “Are we on the brink of a ‘great dying’ in the financial world — one of those mass extinctions of species that have occurred periodically, like the end-Cambrian extinction that killed off 90 percent of Earth’s species, or the Cretaceous-Tertiary catastrophe that wiped out the dinosaurs?” Here we thought we were making all this progress as a species, and suddenly we find our supposed innovations lumped with Tyrannosaurus rex. Doesn’t sound like much of an ascent to me.

Michael Hirsh is Newsweek’s national economics correspondent and the author of “At War With Ourselves: Why America Is Squandering Its Chance to Build a Better World.”