Global markets sank sharply at the end of last week on fears that Dubai World, a subsidiary of the government of Dubai, was on the verge of defaulting on approximately $60 billion of the emirate's $80 billion in total debt held by creditors world-wide. The rush of news stories added to the wildfire of panicky speculation, with headlines ranging from "Dubai Default Risk May be Big US Bank Problem," to "Dubai Shows Limits of Government Rescues."
Read moreDealing with America's Debt Overhang III - Subramanian, Bibow, Karabell, and Rediker
The bursting of the housing and credit bubbles has left the United States with a huge debt overhang. Can we grow our way out of debt without setting off inflation? How can households reduce their debt levels without killing off demand? Does the debt pose a threat to the dollar?
Read moreThe New World Economy
So the G20 met over the weekend, and if there was any doubt before, there should be none now: the financial balance of power is shifting. China, Brazil, even Japan can all claim more sound economies than the United States, and they collectively let it be known that they would no longer take marching orders from the Washington consensus. They expect a voice, and they are not asking permission.