An American 'Savings Glut'

Western finance capitalists have gotten so avaricious that they are destabilizing the very system whose legal mechanisms have enabled their power and wealth.

On an international scale, this was most notable during the Asian Financial Crisis of the late 1990's, when IMF imposed austerity laid waste to the governments and public sectors of developing Asia. It ended with riots in the worst hit country of Indonesia, resulting in deaths and a wave of anti-Chinese hostility. The long-term reaction in Asia was the development of reserve arsenals - the stockpiling of dollars and reserves to combat currency collapse and speculative outflows of capital. This 'savings glut' is blamed by some economists as the cause for the current gap between capacity and demand. Yet this 'glut' is a direct response to Western finance avariciousness. In the long run, the IMF's harsh response to the crisis made it weaker. It now appears unable to raise money without either selling bonds, or gold, actions hardly taken from a position of strength.

Within the United States, there are a similar set reactions evolving in response to the banking crisis. Debt-laden banks such as Chase have decided to double the minimum payments, or dramatically increase the interest rates, of their credit cardholders. This, during the longest lasting downturn since the Great Depression. The result will be an insecure and savings oriented American consumer at a time of exceptionally weak private demand. In other words, an American version of the Asian 'savings glut'. This of course will trash the overall economy over a period of years. It will end up hurting profit rates much more than the consumer - once they have either paid their bills or declared bankruptcy and defaulted. The later of which is really the best thing for many, many people with high interest debt loads.