They said that the late 20th century, 90 years is not normal. Money flows to emerging markets, and then suddenly out, at that time, this mutation seems to be a huge crisis.
They said that the chaotic years of the 21st century also. First the tech bubble burst. Subsequently, in the late 20th century, 90 emerging markets battered U.S. government began mass storage, resulting in Federal Reserve Chairman Ben Bernanke (Ben Bernanke) said the "global savings glut." With the easy monetary policy in developed countries and there is no vision of regulatory policies, the capital in the United States and other countries sparked a debt boom, causing the housing market bubble.
They also said that over the past few years is a mess. With the credit and housing boom bubble burst and the end of hundred years. The Government rushed a helping hand, central banks lowered short-term interest rates strongly. Hedging and investors have bought U.S. Treasury bonds, borrowing in the United States has a large number of cases result in long-term interest rates lower, and now the Fed is to prevent long-term interest rates.
What happens next? U.S. economy will recover, to the recovery of the day what will happen? Result may occur: reversing global savings glut of cheap capital is no longer sufficient.
McKinsey Global Institute think tank McKinsey (McKinsey Globe Institute) expected in the next few years, will increase investment in emerging markets, especially China and India, while the savings of these countries started to decrease. McKinsey report in the latest "Farewell to cheap capital" (Farewell to Cheap Capital), said enterprises, banks, consumers, investors and government will have to adapt to a new world, the world's capital more expensive and no longer Well enough, more than half of world savings and investment have occurred in emerging markets.
Overall, the world economy, investment can not exceed the savings. Before farmers will harvest the corn divided into two parts, one to eat and sell (consumer), part of the store (savings) as seed for next year (investment). Global economic output is the same reason. Throughout history, 25 years most of the increase in savings from China and other poorer countries, flows to richer countries, especially the United States.
Chinese workers and peasants thrift money in the bank. Banks to lend money to government, to lend the U.S. Treasury and mortgage giants Fannie Mae (Fannie Mae) and Freddie (Freddie Mac). Eventually, the money is used to support the U.S. low-cost subprime mortgages before the crisis and the subprime crisis Mr Obama has sent the government's huge fiscal stimulus plan. In 2008, $ 4 for every $ 1 in there saving the world from the Chinese government, companies and families.
McKinsey said the next few years it will fade as China and India to accelerate the pace of investment. McKinsey said that China plans to build cities in the country 170 new subway system, roads and high-speed rail.
170 cities! In order to keep pace with urban population growth, China needs the equivalent of a size every two years in New York City residential and commercial area; India is an annual increase in the Chicago area. HSBC (HSBC) in Hong Kong in the Asia-Pacific senior economist Mr Neumann (Frederic Neumann) is expected, because many Asian factories close to the maximum capacity of production, capital spending is likely to surge. Based on global economic growth forecast, McKinsey predicts that by 2010 the ratio of global investment and output will be close to 25%, which is the last century has not seen since the early 70's high. Before the global financial crisis, investment and output ratio slightly higher than 22%.
But in China, if history and Chinese Five-Year Plan can be used as guidelines, consumers in particular, may reduce the savings. Japanese still live savings may save less, because more and more retirees in the use of deposits, in spite of the decreasing population, the lack of promising investment in Japan, means that Japan will continue to Ba deposits into other countries and area.
Then the deposits will come from? If this all goes well, the majority of savings will come from the Americans, honed over the past few years, Americans may be saving more. U.S. federal government will probably reduce the deficit (like the coinage of the economist as "our money" (dissaving)), but will remain in health care and pensions have more spending. McKinsey said that if the British and American families continue as at present, the global savings rate will rise by one percentage point, partly offset by savings in the reduction of the Chinese people, because Chinese consumers are spending more income.
But only partly offset. Could easily become a global savings glut of global savings deficiency, which might mean that interest rates sharply.
McKinsey estimates that if the inflation-adjusted annual average long-term interest rates back to 40, then 1.5 percentage points higher than the current 3% of the 10-year Treasury yields increased significantly. If the emerging markets is more accelerated than in the U.S. infrastructure and other investments, while other rich countries to increase their overall savings, then interest rates will rise further, which will curb global economic growth.
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