At the end of an article Fear of the dragon in this week’s Economist, analyst Chris Wood (I have no clue who that is) is cited saying that China is doing more to eliminate the global imbalances than the US (Global Imbalances = Chinese working like crazy and not spending – exporting a lot, Americans consuming way too much – importing ). He says that China is encouraging spending while the US is doing nothing to prop up the already low and further falling saving rate.
He misses the point why the US saving rate is falling and that the government has a very limited maneuver space. The saving rate is falling because of massive US government’s borrowing and stimulus spending. The Americans, like the Chinese are trying to spend more to prop up the economy. The falling saving rate is a (negative) byproduct of the fiscal stimulus. Unless the above cited analyst argues that the fiscal stimulus is stupid, he has no case…
By the way, even though one can certainly argue against the stimulus, I actually think that despite all the inefficiencies associated with government spending, it makes sense. (More on that sometimes else…)