correcting global imbalance ...!!

The high savings rate in few asian countries paint a completely contrast picture in relation to the dearth of savings in the west particularly the US. The habit of excessive consumption in the west partly financed by debt had sown the seeds for this crisis. The tendency of high expenditure especially for non-productive purposes can be really dangerous for a country in the long run. The presence of social safety net and unemployment benefits might have contributed to this sort of behavior . It has contributed America running trade deficit with many Asian countries. Such huge deficit may adversely affect its dollar which may suffer prolonged depreciation spanning decades. Its high time that Americans start saving and stop spending money for wasteful purposes.

Secondly, the high savings rate in countries like china have a role to play in the other side of the story. Instead of depositing huge foreign exchange reserves in US 's treasury bonds, the money can be spent in importing goods from US and buying other assets abroad. However, this stingy attitude on the part of chinese has led to hoarding of cash by one country and it can initiate liquidity risk on a global scale. Most of this distortion is due to artificial undervaluation of yuan by chinese state authorities. It is hoped that china will play its due role in correcting this global imbalance to foster sustained economic growth.