> I've been reading quite a bit lately about the US
> "lack of savings", as in the following from le monde:
>
> "The United States considers itself innocent: it
> refuses to admit that it lives beyond its means
> through weak savings and excessive consumption."
>
> I've also read that the average consumer has a certain
> debt overhang, etc.
>
> Yet I always understood economic bubbles as produced
> by "savings" (excess $) with nothing productive to
> invest in. And currently, I see real estate bubbles,
> stock bubbles, art bubbles, rare book bubbles, e-bay
> bubbles, etc. Seems like recently some on-line gamer
> bought a virtual island for something like $25,000,
> for god's sake!
>
> So my feeling was that it wasn't savings per se, but
> the fact that available savings was concentrated in
> too few hands.
>
> Am I wrong? Could someone explain this "savings"
> thing?
Le Monde was referring to insufficient U.S. *domestic* saving. We generate too little saving at home, so we have to supplement it with foreign savings, mostly in the form of foreign purshases of U.S. bonds. It's probably true that bubbles usually happen when there's a lot of "excess" capital sloshing around. But in the late 90's, for example, a lot of that capital was coming from abroad.
Seth