6891129
Description
Mind Map by Chloe Curtis, updated more than 1 year ago
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Created by Chloe Curtis
over 7 years ago
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Savings Glut
- WHERE?
- China
- Attractive culprit-> lay blame on currency management policies
- Roubini
- US borrowing problem reached 10% of GDP before collapse
- US borrowing problem reached 10% of GDP before collapse
- Roubini
- 0.0042 cc per person vs 4
- Gross saving 50% of GDP
- Attractive culprit-> lay blame on currency management policies
- Oil
- Bloated revenues
- Tend to have fixed/managed ER thus increased CB reserves
- Bloated revenues
- US
- US fiscal prolific and a consumption binge
- US fiscal prolific and a consumption binge
- Asian
- Build international reserves following 1990
- Build international reserves following 1990
- China
- EVALUATION
- US CA deft autocorrecting
- Decline in private consumption vs $
- Decline in private consumption vs $
- Epicentre became safe haven
- US still demander of last resort
- US CA deft autocorrecting
- Stiglitz
- Able to import capital on better terms.
- Able to import capital on better terms.
- Greenspan
- Bond market conundrum-> disconnect between LR IR and fixed rate mortgages rates.
- Search for yield-> FM-> implicit guarantee by the Treasury.
- Bond market conundrum-> disconnect between LR IR and fixed rate mortgages rates.
- Turner Review
- Foreign ownership of UST risen from 20% in 1994 to 57% in 2007.
- Risk free rates at historically low levels.
- Foreign ownership of UST risen from 20% in 1994 to 57% in 2007.
- Reinhart
- Capital flow bonanza
- Rising asset prices, slow real economic activity, large CA deficits and sustained debt buildups precursors
- Europe-> Sudden stops and tailspin.
- Capital flow bonanza
- Obstfled & Rogoff
- US soaking up more than 2 out of every 3 of these saved dollars in 2004-6.
- US soaking up more than 2 out of every 3 of these saved dollars in 2004-6.
- Krugman
- Wile E Coyote moment unsustainability of US CA $ would collapse.
- Hard to imagine crisis without international monetary movements-> US and Europe.
- Ocean of money-> markets will always self-correct.
- Wile E Coyote moment unsustainability of US CA $ would collapse.
- My View
- Amplifying mechanism rather than a trigger
- Cushions in FE eroded and fiscal finances deteriorate
- Productive investment opportunity
- Root of all evil flood of foreign money not propensity of US to over consume
- Not necessarily excess savings-> Fiat money
- Amplifying mechanism rather than a trigger
- Bernanke
- Global savings glut 2005
- Reinforcing-> pushed up dollar and deficit
- Reinforcing-> pushed up dollar and deficit
- Loanable funds theory of interest
- Explained Greenspans conundrum
- Weaker exports and deficit
- Innocent bystander
- Global savings glut 2005
- Summers
- Secular stagnation
- Excess savings
- Excess savings
- Weaker investment and consumption in individual countries
- Secular stagnation
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