Wednesday, April 27, 2005

America Pretends to be a Helpless Baby

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"The Global Savings Glut" by Robert Samuelson of the Washington Post.

We are all taught that saving is good -- indeed, Americans are often chided for spending too much and saving too little. But what if the problem of today's global economy is that people elsewhere -- in Europe, Asia and Latin America -- are saving too much and spending too little? Former Princeton University economist Ben Bernanke argues that this is precisely the case. He calls it "the global savings glut."

The power of a good idea is that it dispels common confusions. Bernanke's global savings glut is just such a notion. It helps explain (a) the huge U.S. trade deficits; (b) the weakness of the current economic recovery (now 3 1/2 years old); and (c) the difficulty of doing anything about (a) and (b).

As a rule, saving is good. It helps individuals afford big-ticket items (a home, college tuition), protect against emergencies and prepare for retirement. For societies, it provides funds for productive investments in new factories, technologies and businesses.


This article is hilarious. The economist who came up with this latest excuse for our irresponsible economics reminds me of small children when they are doing something very naughty. "He MADE me do it," the child whines while pointing to usually a smaller and younger child. Good mothers seldom are impressed with this sort of reasoning.

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