The world upside down: the poor lending money to the rich.
It is really difficult to star writing (or even to star thinking) when I have a side banner on my screen which says in huge pink letter over an also pink background "!El ChikiChiki en tu móvil! !Descarga sin límites! It is really tempting to just say to oneself, Why bother!!. But I will try.
Today in realmarkets I come across the following article by my admired Marting Wolf in which he summarizes what is happening lately in the world economy. One of explanations is really striking: the emerging economies (the poor) have been saving in order to lend to the develeped countries (the rich). We "the rich" have been buying our houses, and our SUV, and our trips to exotic places with the money of the peasants and the factory workers of China. In Mr. Wolf´s words:
"Emerging economies have also been huge exporters of capital. China’s current account surplus was 11.1 per cent of gross domestic product last year.[...]The excess savings have been largely absorbed by those high-income countries with liberalised financial systems adept at channelling credit to those people interested in borrowing on the needed scale: households."
Now the party is over, the music stopped and there are no chairs for all. Perhaps this time around we the rich will learn from the poor how to be more humble and more thrifty. We might learn that More is Less.
Comments
- Miranda.
Yes Felix, you´re very right, like someone said, we have borrowed from German banks to pay for our German Mercedes or BMW´s, while we looked down on them because thir economy was not growing as fast as ours.
I believe we are living very interesting times, and some of the rules of the game are changing before our eyes. Who could have imagined a Swiss bank like UBS loosing millions of euros, or the crisis of the British Northern Rock or the American Bear Stearn? Where those empires not headed by the very best and brightest leaders, doing business in the most developed and richest economies in the world? What the hell happened? Where did all go wrong? But like my good American friend correctly asks, how are going to fix it?