That is very true, but saving rates in the US have been low in comparison to other countries, particularly Japan, in good times and bad times.
I just don't think that the household debt numbers can confirm or conform to a notion of US "weakness" in relation to China, Russia, India, Brazil, etc.... Relations between city and countryside and the productivity of labor (which is really the same as relations between city and countryside) are much more advanced in the US. If there ever was a "paper tiger" on the world economic stage, China, not the US, is it. This is not to say US won't experience a recession, a severe recession, but when it does it won't be because China, or Russia, or Saudi Arabia, has decided to redeem its T-bonds, or has switched to the euro, or has shown up at the NY FR Bank asking for its gold. ----- Original Message ----- From: "Doug Henwood" <[EMAIL PROTECTED]> To: <PEN-L@SUS.CSUCHICO.EDU> Sent: Friday, August 10, 2007 9:26 AM Subject: Re: [PEN-L] uncle sam's banker > On Aug 9, 2007, at 10:31 PM, sartesian wrote: > > > Couple of things... first I don't think the accumulation of US > > Treasury > > notes or bills overseas has anything to do with the savings rate of > > the > > US public. I also don't think that the accumulation of US dollars or > > govt securities by foreign countries indicates the decline of US > > capitalism, a threat to the US ruling class, or the decay of US > > manufacturing capability. > > > > I do think US borrowing, US govt borrowing has everything to do with > > tax revenues and expenditures, like ah... let's see US was running a > > budget surplus prior to 2001, was considering pulling, actually may > > have > > in fact pulled, the 30 yr bond from the markets by advanced > > redemptions, > > The federal deficit isn't all that big. What changed in recent years > was a huge increase in mortgage borrowing. The stock of mortgage debt > was equal to 65% of disposable personal income in 2000 and is 100% > now. Total household debt rose from about 67% of GDP to 95%. Over the > same period, federal debt rose from about 34% of GDP to 37%. The low > savings rate reflects a rising rate of borrowing in the aggregate, > but it also seems that the upper quintile stopped saving in the late > 90s and hasn't gotten back into the habit yet. So our rich can't lend > to our middle- and low-income households; instead, we have to go > abroad for cash. > > Doug >
