For almost two decades, global imbalances were small enough to ignore. That reprieve is over.

America’s net liabilities to the rest of the world have reached an extraordinary 90 per cent of GDP.  G7 has rightly taken notice. 

President Emmanuel Macron has placed the restoration of balanced and sustainable growth at the heart of France’s G7 presidency; my colleagues and I have set out the diagnosis and the cure in a memo.

Imbalance results from the dynamics of saving and investment. 

Capital has poured into US equities, where the “Magnificent Seven” account for roughly 33 per cent of the S&P 500; valuations are stretched, risk premiums thinner than on the eve of the 2008 financial crisis and more credit flows through opaque non-bank intermediaries. 

US public debt, near 120 per cent of GDP, is rolled over in shorter maturities — and the buyer base is shifting in a worrying way as a growing share is absorbed by price-sensitive domestic investors and leveraged hedge funds, leaving the world’s most important safe-asset market more prone to sudden bouts of illiquidity.

We have been here before. The imbalances of the 1980s fuelled the protectionism the Plaza Accord sought to contain; those of the 2000s unwound in the catastrophe of 2008. 

We do not need a third demonstration.

Hélène Rey Financial Times 15 june 2026

https://www.ft.com/content/0e78efc2-4b88-4810-84dc-97d157eaa11a

The writer, a professor of economics at London Business School, chairs the G7 expert group on Global Imbalances.

The Global Economy Is Threatened Again by Trade Imbalances

https://englundmacro.blogspot.com/2026/06/the-global-economy-is-threatened-again.html