I wrote this in Michael Pettis comment section in response to his brilliant posting today:
"How to link Australian iron to Marine le Pen"
As usual brilliant, and you are frighteningly alone showing your academic courage. But I have some thoughts which I hope are additive.
It should be understood that it is not just that there is a curious Dornbush "suddenness" that resolves imbalances, but if those imbalances were built as policy, especially policy that at its heart is meant to provide societal control, increase government power or repair a perceived deficiency in power or alleviate a risk to power (Tienanmen) , or to counter a foreign security risk, the imbalances created by policy can only be resolved by "un-policy". In other words via catastrophe and jumps which will be weeks in the process versus the decades that the policy required to build those imbalances. Since imbalances created are the results of policy, it means by definition they have the current group in power committed "all in" on those imbalances. China may actually be able to remedy the imbalances by a change in policy based on Confucius ideals of the greater good -but that has never been accomplished in history be it the Athenian mercantilism to Roman wheat trade with Egypt to American housing market. So the odds as defined by history is that China will experience a very severe cataclysm ,right up there with a Yihetuan or Taiping event. I hope not, as that would result in war.
That is what is unsaid - maybe it has to be unsaid - that such imbalances are not just severe economic conundrums lacking sensible policy - but are always the cause of all war. These imbalances, therefore, are the most important foreign policy and security issue for the USA and all world governments. If they are successfully deflected from the international lines of transmission - for example the USA "ate" the first phase of the China imbalance resolution via the solvency event of 2008 - they will always cause at best intense internal insurrection or a civil war and at worst global war. Very serious stuff indeed.
These imbalances are intolerable for this globalized world.
Your ideas on Saravelos "Euroglut" are thoughtful. And Saravelos is thoughtful to approach Europe on an international identity perspective like the good Minskian I am sure he must be. But that glut does not exist in truth. The real imbalance is not that that Germany and a few Nord fellow travelers have excess savings and low demand, but that all of those savings are matched and then some by the deficit in the PIIGS. The T2 accounting has become ubiquitous such that it no longer terrifies or even really acknowledged . And the Nord EZ feel they have successfully forced the PIIGS into a long term acquiescence of the policy that built the T2 imbalances, and they will remedy those imbalances via labor. Thus the 50% youth unemployment in Greece today, near matched in Spain and Portugal. And with Italy starting to follow. This remedy though is a fiction, a Potemkin policy which is providing the illusion that the Nord have the ability to consider exporting their excess savings and deflation to the USA. What will happen is all those savings will be marked down so the entire EZ will net to levels the T2 net would now indicate (and then of course the "shadow" netting added as well) so that all that Euroglut goes "poof". Of course the last time Europe had this process WW II occurred, and it is telling that you went to Keynes "Consequences of the Peace". The only constructive answer that can work for Europe is that the T2 and other shadow imbalances are netted across Europe via transfer payments both spot and forward via trans-Europe unemployment insurance like payments and social security and health coverage. There is the small issue of a constitutional apparatus being built to administer this. So I do not think the "Euroglut" is of any risk to the USA.
What I do know is that the highest levels foreign policy formulation in the USA from the beginning of the Euro crisis were well aware of all I say above and anticipated the current status. I heard such discussion first hand. The USA policy formulated for the EZ crisis from 2011 on was to give Germany a "green light" to force PIIGS to use labor to maintain and work to remedy the EZ imbalances. That very capable US analysis calculated thresh hold levels of unemployment in the PIIGS that they feel could be maintained before insurrection and the return of fascism. That Fed Reserve support of the regional central banks along with one off ad hoc measures like the IMF "troika" would also assist in maintaining German hegemony of Europe. France would be bought off by calling this a Gaullist European solution. This was sought by the USA policy authors because of the obvious logic that the only possible competitor to United States hard power would be a Monnet Plan "United States of Europe". So the USA is supporting the German hegemony at the terrible cost of strapping the PIIGS, thereby keeping Europe in one vast chronic "frozen" economic crisis. The USA has no interest in seeing a land and naval force develop that would equal the US military. And a United States of Europe would have a land and sea force the complete equal to the United States.
Lastly you are wrong (said with respect), There is one economist who clearly anticipated both the USSR demise as well as the Japanese crash. Whats more she correctly predicted the "lost decade(s)" of Japan that followed the 89 crash. I am not certain that she was aware of this (but I would imagine this autodidact economist must have read Minsk), but she used a very clean application of Minskian like identities to global imbalances to reach insight. Whats more she freed herself from the national account data and considered the world as populated by large city-state economic regions and where the imbalances reside. For example she would focus on imbalances between Honshu and Tokyo and much as Japan to the United States. That person was of course the great Jane Jacobs. Just as you went back to "Consequences", a read now of "City and the Wealth of Nations" is a good use of time.