"The West's On-Going Capacity for Self-Delusion"

Ouch.  A fascinating piece, surveying a wide swath of territory.  Excerpts:

These geo-strategic trends – the rise of the East and the fall of the West – have been apparent for several decades. But they have been accelerated and accentuated by the Western world's "sub-prime crisis"...

While the West accepts the diplomatic furniture has been re-arranged, we still act as if the world outside has not. "The maintenance of undervalued currencies by some countries has contributed to a pattern of global spending that is unbalanced and unsustainable," Federal Reserve chairman, Ben Bernanke, boomed at the summit.

Bernanke was pointing the finger at China – reiterating the Western view that our woes are all due to Beijing's reluctance to let the yuan (which has risen 20pc against the dollar since 2007) appreciate faster still. The response of almost every economist outside the Western world, on reading Bernanke's words, would surely be: "Who are you kidding?"

When it comes to under-valuation, America's "strong dollar" policy of recent years has been a study in how to keep a currency weak. Now the US, and the UK too, have resorted to "quantitative easing", the modern-day equivalent of the beggar-thy-neighbour currency devaluations of the 1930s....

Bernanke's G20 rhetoric fools no-one. But it does remind the rest of the world of the West's on-going capacity for self-delusion...

China's influence, and its financial muscle, is rising exponentially. Last year, the country loaned more to emerging nations than the World Bank. The fact that Beijing can propose building a new Trans-Continental Railway, in America's backyard, across a land-mass of unmatched strategic importance, and be taken seriously, speaks volumes.

The global power balance is shifting inexorably. The Western world needs to accept that. But as the G20 showed, the policies we propose and the decisions we take, are designed to deny, rather than accommodate, this new reality.

Too much good stuff to copy. Go read the original.