On 2/6/07, Doug Henwood <[EMAIL PROTECTED]> wrote:
The negative savings rate isn't a problem until foreigners stop lending the US money, or US households suffer an outbreak of prudence and rebuild their savings. Until those things happen, it's not a drag but a stimulus.
the private-sector negative saving rate is a problem because it involves accumulating debts and/or running down assets. These represent imbalances that would make any future r-word more intense or longer-lasting. Imbalances _per se_ do not cause r-words to occur. the government negative saving (i.e., the govt deficit) is not much of a problem yet. Most of the brouhaha is about the size of _future_ deficits implied by Bush spending & tax cuts, along with assumed necessities (such as the need to fix the alternative minimum tax in the 1040) and the immense expense of the splendid little war. the phrase "outbreak of prudence" is a bit off. at the lower levels of income, low saving rates result from the pressure of needs and social obligations on income more than from a lack of prudence. -- Jim Devine / "The truth is more important than the facts." -- Frank Lloyd Wright
