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6891129
Savings Glut
Description
Savings glut
No tags specified
finance
economics
savings
business/economics
Mind Map by
Chloe Curtis
, updated more than 1 year ago
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Created by
Chloe Curtis
about 8 years ago
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Resource summary
Savings Glut
WHERE?
China
Attractive culprit-> lay blame on currency management policies
Roubini
US borrowing problem reached 10% of GDP before collapse
0.0042 cc per person vs 4
Gross saving 50% of GDP
Oil
Bloated revenues
Tend to have fixed/managed ER thus increased CB reserves
US
US fiscal prolific and a consumption binge
Asian
Build international reserves following 1990
EVALUATION
US CA deft autocorrecting
Decline in private consumption vs $
Epicentre became safe haven
US still demander of last resort
Stiglitz
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.
Turner Review
Foreign ownership of UST risen from 20% in 1994 to 57% in 2007.
Risk free rates at historically low levels.
Reinhart
Capital flow bonanza
Rising asset prices, slow real economic activity, large CA deficits and sustained debt buildups precursors
Europe-> Sudden stops and tailspin.
Obstfled & Rogoff
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.
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
Bernanke
Global savings glut 2005
Reinforcing-> pushed up dollar and deficit
Loanable funds theory of interest
Explained Greenspans conundrum
Weaker exports and deficit
Innocent bystander
Summers
Secular stagnation
Excess savings
Weaker investment and consumption in individual countries
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