Some disturbing parallels to the collapse of globalisation

IS the international financial system on the verge of an "epoch-defining seismic rupture" accompanied by a return to global protectionism? This warning was made a couple of years ago by Claudio Borio, the respected head economist at the Bank for International Settlements. Since that time, emerging markets have crashed and some countries have resorted to capital controls to protect their currencies. The last time globalisation collapsed was in the 1930s. Looking back at this disastrous period, it is possible to identify some disturbing parallels.

The conventional view of the Great Depression, espoused by former Federal Reserve chairman Ben Bernanke among others, is that it resulted from the US central bank's failure to prevent a collapse of the domestic money supply. This interpretation is too parochial. In truth, America was caught up in a global crisis which had its origins in acute financial weakness in Latin America and Central Europe - the emerging markets of their …