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At Liberty Street Economics , New York Federal Reserve economist Linda Goldberg provides the most succinct history of international banking we've seen. Here it is: Actually, she has a series of charts and explanations of key changes in banking since the 1800s. The above chart gives the broad overview. Goldberg calls the rise from 1860 to 1914 "the First Age of Globalization," in which increasing connectivity between nations brought about "large-scale capital investments (such as in railways), a deepening of global finance, and expanded prosperity." The start of the First World War brought that all to a halt. Goldberg: World War I marks the onset of the second period—what economists Raghu Rajan and Luigi Zingales call “The Great Reversal of 1914 through 1939.” This period is characterized by financial collapse and the Great Depression. They forcefully argue that this episode shows that globalization is not an immutable economic force, and a backlash against it can be disastrous. Indeed, as the previous chart shows, after restarting briefly, financial integration again collapsed with World War II and recovered slowly thereafter. Recognizing the importance of avoiding the mistakes of the interwar period, the Allies met in Bretton Woods, New Hampshire, in 1944 to create institutions to oversee the repair of the international financial system and to ensure trade and recovery among nations. This effort gave rise to the International Monetary Fund and the World Bank, and in 1947 to the General Agreement on Tariffs and Trade (in Geneva), which evolved into the World Trade Organization. The policy focus of these organizations was institution-building, recovery, and the financing of at least temporary balance-of-payment difficulties that arose at the sovereign level. The last period—the “Second Age of Globalization”—spans roughly 1960 through the end of the twentieth century. The era is characterized by intense financial integration. One of the most frequently used metrics of international financial integration, depicted in the chart below, demonstrates this point. Constructed using data on international assets plus international liabilities relative to GDP, the metric shows a number of periods of accelerating financial integration. How would you define the era from 2000 to 2008, and then the period we are in now? Read How Has the Business of International Banking Changed? here .

In a new Economic Letter for the Federal Reserve Bank of San Francisco , Carolyn Evans shares this diagram representing a series of trade agreements among various countries: This "spaghetti bowl" shows the complexity in managing global trade policy through a series of partner-to-partner agreements--or Preferential Trade Agreements (PTAs). Evans: This type of proliferation of agreements has been termed a “spaghetti bowl” because there are so many overlapping bilateral arrangements among nations. Such a complex mesh of relationships could have the unintended effects of raising the cost of trade and distorting production patterns across countries. These consequences may emerge from two aspects of a plethora of trade agreements: rules of origin and tariff rates. Rules of origin set out standards determining where a particular product originates. They specify that, in order for a product to be deemed to originate from a certain country, a meaningful portion of that product’s value must come from that country. Rules of origin are put in place to eliminate cheating, whereby one country imports a product from a non-partner country and then re-exports it to the free-trade partner. Satisfying rules-of-origin requirements has become increasingly complex, since production processes now stretch across multiple countries. When an assembling country sources inputs from a number of other countries and then exports the finished product to another final market, it becomes difficult to determine exactly where the product originates. Since each PTA has its own rules of origin for particular parties to the agreement, meeting those requirements may become quite complicated. While global, multi-lateral trade agreements are very difficult to work out, they may be a more efficient way to work out more effective, and efficient global trade. They also, Evans argues, offer "unique economic opportunities over and above what is available via more limited agreements." Read Bilateralism, Multilateralism, and Trade Rules here .

It is of utmost importance to China's leaders that China be recognized as a market economy. As a market economy, China would be treated differently when it comes to global trade law. But while the nation's leaders appear to believe that admission as a member of the WTO in 2001 triggered a 15 year countdown to market economy status, Bernard O'Connor says "idea that there is a deadline is an urban myth that seems to have gone global." Writing at Vox , O'Connor says China must earn market economy status by satisfying very specific criteria: As Karel De Gucht, the current EU commissioner for trade, recently stated, whether China is or is not a market economy is a technical question under EU law. The EU assesses the existence of a market environment using five criteria set out in the EU antidumping regulation. Such conditions can be summarised in the following questions: Does the government influence the operative decisions of firms or are they made in response to market signals? Does the legacy of the command economy, in terms of public ownership, barter trade and so on, affect firms' operations? Do firms have effective accounting standards? Do firms operate under an effective framework of bankruptcy regulation and property-rights protection? Do firms convert currency at standard market rates? Does China as a whole meet these criteria? This is an open question. Both the US Department of Commerce and the EU Commission have found, during the course of investigations into companies in antidumping investigations that firms in China do not comply with international accounting standards, and in anti-subsidy investigations, that many market sectors operate within the framework of the five-year plans which encourage some sectors and discourage others. For example, companies in the encouraged sectors receive funding from state-owned banks without any regard to the risks which such funding might incur. In addition, many countries have questioned whether China allows its currency to float. Brazil has raised this issue in the WTO referring to the concept of monetary dumping. On the basis of analysis carried out in the US and in the EU it is unlikely that China would be considered a market economy according to the normal standards applicable in EU law. And Article 15 of the China WTO accession protocol requires that the evaluation be carried out on the basis of the law of the importing WTO member. Read Market-economy status for China is not automatic here .

IMF Managing Director Christine LaGarde is in China today. Speaking at the International Finance Forum , she said the global economy has entered "a dangerous and uncertain phase": Later in the speech, LaGarde addressed China's economy directly. Overall, she gave it good marks. But she warned against complacency and said that all nations need to recognize that they are part of a global economy and that no country is immune from the effects of problems elsewhere, even halfway around the globe: It is on the right path in terms of reducing domestic vulnerabilities—by moderating the pace of credit growth, increasing provisioning and capital, and expanding scope of macroprudential policies. There is still scope for using monetary policy to restrain credit growth. Fiscal policy is appropriately moving back to balance. But if the growth outlook deteriorates significantly, it could become the first line of defense, given ample fiscal space and capacity to deploy resources quickly. China is also on the right path in terms of reorienting the economy towards domestic demand. As Laozi said, “a journey of a thousand miles must begin with a single step”. Indeed, China has already made good progress on the road to rebalancing. The current account surplus has fallen from an all-time high of 10 percent of GDP in 2007 to just over 5 percent last year. While some of this comes from weak global demand, some of it also comes from higher imports—which helps the global economy. Now is the time to move further from exports and investment toward consumption—including by further boosting household incomes and expanding social safety nets. Reform of the financial system continues to be important and, as we have said before, China also needs a stronger currency in real effective terms. Read the full speech here .

As much as the US economy is struggling, exports have been strong ever since the recession ended. According to Jay C. Shambaugh , of the McDonough School of Business at Georgetown, exports have risen 23% since the end of the recession. This is easily explained by the weakness of the dollar, right? The costs for US goods abroad have decreased along with the strength of the US economy. Not so fast, says Shambaugh. Writing at Econbrowser , he points out that the patterns of where exports have risen do not match the dollar's relative decline: The takeaway for Shambaugh seems to be that, while exports can not serve as the fix for the US economy's problems, their relative strength is a sign that the foundation might not be as cracked as some suggest: The ability of U.S. firms to increase production and sell to markets where demand is growing is just more evidence that the U.S. economy is not fundamentally flawed or broken. Firms can find workers and increase output where they have customers. Yet while exports to growing foreign markets have been soaring, at home, residential construction has collapsed, structures investment by firms has collapsed, and state and local government spending has declined. All of these are a serious brake on demand. Compounding all this is the fact that real Federal Government consumption expenditures and gross investment in the third quarter was 2% below that of a year ago. This acts as a further brake on growth in output and employment. Some businesses may complain about fear of regulation (though in surveys their number one complaint is lack of customers) and some commentators may worry about structural unemployment and a lack of appropriate skills amongst the U.S. work force. There is plenty of reason to always make sure that supply side policies are sensible and worker training and education is adequate. But these do not seem to be the problems of today. Based on exports, the evidence shows that where there is demand for their products, American firms are more than ready to produce and to sell. Read What can exports tell us about the economy? here .

Three years removed from his darkest hours as Treasury Secretary, Henry Paulson is ruminating on how to fix this country's jobs and growth problems. He discussed the need for new ideas with the Wall Street Journal 's David Wessel this week. At the top of his list: China and the US coming up with new ways to get their economies to work together. Paulson says "fundamental reform" in both countries is necessary or the whole global economy will suffer:

Ben Bernanke spoke in Cleveland last night as part of the Cleveland Clinic's Ideas for Tomorrow Series . The Federal Reserve chair used the occasion to talk about what developed economies might learn from emergin economies when it comes to fostering sustained growth. He seemed to appreciate the opportunity to discuss issues in a larger economic context, as opposed to "short run economic concerns" that he usually addresses. Bernanke framed much of his outlook on the success of emerging economies on the Washington Consensus , as put forward by John Williamson in 1990 and adopted as a guide by the World Bank. From the speech: Ultimately, the principles that John Williamson enumerated two decades ago have much to recommend them. Macroeconomic stability, increased reliance on market forces, and strong political and economic institutions are important for sustainable growth. However, with the experience and perspective of the past 20 years, we can see that Williamson's recommendations were not complete. Reforms must be sequenced and implemented appropriately to have their desired effects. And a successful development framework must take into account that activities such as the adaptation of advanced technologies and the harnessing economies of scale are often critical to economic growth and depend on a host of institutional conditions, such as an educated workforce, to be fully effective. Indeed, advanced economies like the United States would do well to re-learn some of the lessons from the experiences of the emerging market economies, such as the importance of disciplined fiscal policies, the benefits of open trade, the need to encourage private capital formation while undertaking necessary public investments, the high returns to education and to promoting technological advances, and the importance of a regulatory framework that encourages entrepreneurship and innovation while maintaining financial stability. As the advanced economies look for ways of enhancing longer-term growth, a re-reading of Williamson's original Washington Consensus, combined with close attention to the experiences of successful emerging market economies, could pay significant dividends. Read the full speech here .

At News N Economics , Rebecca Wilder shares this chart to show that any global economic recovery that was underway earlier this year has slowed down: Wilder: The chart illustrates the growth of import demand for manufactured goods from the US (12.8% of world import demand in 2011) and China (9.7% of world import demand in 2011) on a 3-month over 3-month annualized and seasonally adjusted basis. Spanning April through June 2011 compared to January through March 2011, US imports for manufactured goods slowed to a 4.9% annualized clip, while Chinese manufacturing imports contracted at a 22.9% annualized pace. US import demand growth peaked at 36.9% in March 2011 (again, on the same 3M/3M SAAR basis), while Chinese import demand growth peaked a bit earlier at 108.2% in January 2011. So could this be the result of the Japanese earthquake and tsunami? Wilder does not think so. Read Global slowdown underway - it's more than the Japanese supply chain disruptions here .