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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: ild who wrote (35022)6/29/2005 5:18:45 PM
From: CalculatedRisk  Read Replies (1) of 110194
 
Professor Kash has an interesting chart presenting savings rates and current account balances for various countries:

International Saving Comparisons
angrybear.blogspot.com

Kash suggests an interesting reason: "... my favorite theory, at least in this case, is that the high rate of saving in many Asian economies is primarily due to the inertia of consumption spending.

It is an increasingly well-established empirical fact that consumption displays a great deal of inertia – people’s consumption habits only change slowly, even when their income rises or falls dramatically. If a country is experiencing rapid economic growth, this could well explain why savings rates are high in those countries: households’ consumption has not yet caught up to their increased income, so they save the difference."

That could be ugly for the US as consumption turns down to match US income!

This is a follow up to his previous post:

Explaining the Capital Flow Puzzle
angrybear.blogspot.com
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