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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (66072)	7/9/2005 3:39:57 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

"a theory espoused by Ben Bernanke, former Federal Reserve governor, is gaining popularity. According to this view, the US current account deficit, rather than being the result of US consumer behaviour, can be explained by a global savings glut." Lex: Global savings Published: July 8 2005 15:32 \| Last updated: July 8 2005 15:32 As ministers discussing climate change at the G8 summit are all too aware, the US is often reluctant to admit to its role in global problems. At least President George W.Bush now accepts that humans contribute to global warming. Unfortunately, there has not been similar progress in explaining savings imbalances. Indeed, a theory espoused by Ben Bernanke, former Federal Reserve governor, is gaining popularity. According to this view, the US current account deficit, rather than being the result of US consumer behaviour, can be explained by a global savings glut. The notion that, in aggregate, the world is saving too much is difficult to reconcile with the facts. Saving has increased in the last two years. International Monetary Fund data for 2004 put the global saving rate at 24.9 per cent of gross domestic product, slightly above the long-term average. Investment, however, has also risen and accounted for 24.6 per cent of global GDP last year. The problem is not the level of saving but its distribution. Capital spreading more evenly, he means There is an excess of savings predominantly in Asia, but also Europe which is reflected in current account surpluses with the savings-deficient US. Mr Bernanke's view is partly correct; some surplus nations need to save less and consume more. Wrong. Countries with lousy finacial policies have to attract capital from those countries where there is overcapacity of everything including capital ovecapacity But placing the blame elsewhere ignores the need for the US to rein in its excessive consumption and attendant property bubble. The delayed, but inevitable, current account adjustment will be far more disruptive if the US is in denial.

To: TobagoJack who wrote (66072)	7/9/2005 4:28:42 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

It seems Stratfor is either catering to some of the agencies paying for bulk subscriptions or subtley campaigning for certain policy changes. By saying that the inevitable was planned for Iraq, they make it easier to pull back from untenable positions. **** As for the North Korea thing, the idea that North Korea would be allowed to play off China against the US is pretty funny. Maybe Dear Leader with hair like a Chia pet thinks he can do it. ******* Today, July 2005, China has a 600 Billion USD surplus. How much will be left in 5 years ? 7 years ? 600 Billion is alot, but it is not infinity. One thing learned by Saudi Arabia, Kuwait, Japan and the government of California : There is no surplus so big it can't be spent or mis-spent. ********* Compare with Japan : NEC buys Packard - Bell, a 3rd level desktop computer maker with a didgy reputation. Lenovo buys the IBM Thinkpad, the laptop with the best reputation. **** However, near zero cost of capital will not last forever, but it can cause some really bad things to occur. Japan has these four lane wide suspension bridges to islands with less than 10,000 people, that in the future will still have populations of less than 10,000 people. ******* The investment questions - how long before the peak surplus occurs ? Now or two or three years ? Then, when will the minimum occur ? That could be as long as ten years away....