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Thanks to the draining effects of the Iraq war and the financial meltdown emanating from Wall Street, a powershift away from American dominance is taking place. Caught between a rising China and an America in relative decline, the new leadership in Japan is recalibrating its post‐World War II relationships. The G‐20 has usurped the role once played by the G‐8 as the governing committee of globalization. And the symbiotic coupling of "Chimerica", born out of the credit bubble built up over the past two decades, is being put to the test.In this section, the new prime minister of Japan, the president of the European Union, the president of Brazil and a leading economic historian assess these shifts.

In this interview with Olivier Guez, the distinguished British historian Niall Ferguson, whose latest book is on the history of money, analyzes the current financial and economic crisis from a long-term perspective. The fact that he was one of the few experts to sound the alarm a few years ago only heightens the interest of his analysis. This crisis has few parallels with the Great Depression of the 1930s. Nor is it comparable with preceding recessions, given its extent, global nature and origins. This time around, it is not excessive public debt that triggered the crisis, but rather excessive private debt, in particular that of households and banks. It is not clear that the conventional remedies -- in other words, the old Keynesian solutions that are once again being hauled out -- will do the trick this time. But one thing is certain: this purge will force us to change the way we consume, and in fact our entire lifestyle. Adapted from the source document.

An introduction to a special section on the "axis of upheaval" argues that President Barack Obama is facing a far more troubling axis than George W. Bush's "axis of evil." The axis of upheaval consists of at least nine members united by their instability which the global financial crisis is making worse. Ethnic disintegration, economic volatility, & empires in decline are identified as three factors that enhance lethal organized violence. Ethnic conflict has long been rampant in the greater Middle East where economic volatility is making declining empires even more vulnerable. Geopolitical consequences of the global economic crisis are inevitable. The three case studies in this special section deal with Somalia's anarchy, Russia's new brand of aggression, & Mexico's drug war; however, the axis of upheaval encompasses many more examples, including Gaza, Iran, Afghanistan, Indonesia, Thailand, & Turkey, the Democratic Republic of the Congo, Sudan's Darfur region, & Zimbabwe. The lethal combination of ethnic disintegration, economic volatility, & empire in decline heralds the beginning of the most lethal era in geopolitics. J. Lindroth

SUMMARYThis article uses price data and editorial commentaries from the contemporary financial press to measure the impact of political events on investors' expectations from the middle of the nineteenth century until the First World War. The main question addressed is why political events appeared to affect the world's biggest financial market, the London bond market, much less between 1881 and 1914 than they had between 1843 and 1880. In particular, I ask why the outbreak of the First World War, an event traditionally seen as having been heralded by a series of international crises, was not apparently anticipated by investors. The article considers how far the declining sensitivity of the bond market to political events was a result of the spread of the gold standard, increased international financial integration, or changes in the fiscal policies of the great powers. I suggest that the increasing national separation of bond markets offers a better explanation. However, even this structural change cannot explain why the London market was so slow to appreciate the risk of war in 1914. To investors, the First World War truly came as a bolt from the blue.