Talk abounds of a global savings glut.

The global savings glut is the result of this perverse relationship.

But no solution is possible until we abandon the savings shortage and savings glut hypotheses and connect today s global financial imbalances with global production patterns and inadequate demand in developing countries.

Apart from accounting for the global divergence in savings rates, tight credit constraints in China might explain the country s high, and rising, savings rate especially as the large rise in national savings is attributable mostly to household savings.

9. The shortage of global savings in relation to the requirements for global investment has emerged as a major policy issue.

The puzzle of the global savings glut may live on for several years to come.

Restoring America s savings investment balance implies a reduction in global aggregate demand of around 800 billion.

Moreover, China s aging population, and its strategy of boosting domestic consumption, will negatively affect global savings.

The global economy needs the surplus countries to sustain growth and reduce excess savings no easy task.

And the rest of the world? A global savings glut would suggest that rebalancing the world economy requires policies to boost America s savings rate and to increase non US households consumption.

Consequently, rather than facing a savings glut, the global economy faces a problem of demand failure in developing countries.

Bernanke s original speech emphasized several factors some that decreased the demand for global savings, and some that increased supply.

But, while global imbalances have preoccupied many observers, few have sought to explain the divergence in world savings behavior.

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Fear as much as institutional blockages may be the source of what is either a global savings glut or a global investment shortfall, depending on how you view it.

Moreover, the recovery is not global, unemployment is still rising in most countries, global savings imbalances have not been addressed, and conditions in the worlds poorest states remain vulnerable.

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The Yètè Mali Savings Network or savings and loan cooperative.

Ben Bernanke, the US Federal Reserve chairman, once famously pinned the whole US current account deficit on a global savings glut.

Just as a family backstops its savings with insurance, countries should be able to tap into a global financial safety net.

Low savings countries cannot easily adjust without an equivalent adjustment in high savings countries, because their low savings rates may have been caused by high savings abroad.