³ÉÈË¿ìÊÖ

"UK & US to earn our way out of recession" - just how we to do this - innovation in banking and financial services? The probability through manufacturing exports is self evidently low at least in Britain given the deplorable reluctance of this Government to intervene in the exorable process of the industry being forced to dismantle itself.

The truth is the green shoots are already turning... err Brown!

Very interesting.

So you're saying the big debter countries may be able to cure themselves of living off debt but the big saver countries are much less likely to cure themselves of living with too many savings even though, in the long term, it is in their interest to do so?

It reminds me of the 1970's and the Opec countries. Of course in this instance most of the glut of money was in the hands of a tiny group of people so encouraging them to spread and spend their money around was presumably relatively easy. When all that money is in the hands of numerous individuals or even in highly risk averse government savings, I guess the situation is much harder.

At least it means it isn't MY fault. Maybe some of the news agencies could start reflecting that fact and stop all this "You did it to yourselves" blame reporting or even "Your government did it to you" or even "Your financial institutions did it to you".

I do seem to remember however that even the high debt countries have vast pots of savings swilling around looking for the best deal the whole time (Pension funds etc). Considering the size and power of these organisations, I'm not sure all the blame can be put at the door or Russia or China!

xJess

What is most apparent is that a world economy and world financial system have been developed without anyone have any real idea about how it works. Economic theroies, usually based on single economies, have been applied to a larger system and obviously need some tweaking. Factors such as curreny values and debt ratios along with "creative financing" do not follow the accepted theories. The normal greed and mismangment have been exaserbated by the open cookie jar that economist viewed as self-filling. The rising tide lifts all boats theory doesn't account for those boats with heavy anchors and short lines.

The stock market is, a continuous bubble. It is very much like an opium pipe.....as long as it goes up, everyone is happy.....but if the opium of making money dries up.....everyone gets frantic.

Until Global Corporations return to building sound business, as their primary goal, instead of manipulating the stock markets, for the benefit of their own stock options (basically greed and corruption), there will be no stability in the stock markets, and indeed, cannot be.

The market should be a long term investment option, not something you have to watch, on an hourly basis.

Another Bubble
I am with you on this. I think the stock market has become less stable over the last 10 to 15 years and the huge swings up and down could continue. Many fund managers talk about there being a 'w' or a 'v' shaped recovery but if they stand back from the chart and look at its shape it is starting to form a giant 'W' spread over a couple of decades.
Since the introduction of personal pensions and ISA's we have joined the rest of the world where more individulas are speculating and the more participants we have, the more unstable it gets. Its a bit like when you carry a bowl of water. It is easy to carry a bowl of water when it is only a third full because we can adjust the bowl to avoid any spillage. The more water in the bowl, the less confident we feel and the whole thing becomes unstable.

What this really means is that the crash has not really taken the instabilities out of the system. The underlying issues remain and could cause a repeat event. We should not be all that surprised.

The thought occurred to me a couple of days ago that with all these apparent green shoots that we could actually recover from recession which is if anything a statistical definition, yet still have rising rather than declining unemployment.

The world has changed and we all need to catch up.

The answer is not to get the "borrower" countries to save more but to get the "saver" countries to save less. The world as a whole must move away from individuals building up large sums of personal savings to pay for their old age, to a system where Governments pay for adequate pay-as-you-go state pensions. And this particularly applies to countries like China where there is currently little or no state pension provision.

There is far too much "saving" in this world (huge amounts of individuals' money looking for a good rate of return) and far too little "investment" in things like R&D, training, infrastructure etc. The latter is inevitably almost entirely paid for either by Governments (out of taxation) or by successful companies ploughing back profits. By these definitions there is no connection (or indeed an inverse correlation) between savings and investments - in other words "savings" are a bad thing.

'stating the blooming obvious again' I see, as my hero Peston would say

if people didn't understand how the markets work and how under-regulated globalisation has exacerbated the gyrations, then surely they do now, after the events of the past year

and where we are at is a conundrum if you like, or an ongoing sea-change; I suspect the changes that are beginning to get underway are so huge that 99% of economists just can't see them, including you, because economists are crippled by their dyed-in-the-wool traditional training and slavish devotion to establishment thinking

go on Stephanie, if it's an interesting time to be an economist then please try to come up with some new ways of analysing what's happening! the old economics is broke and can't be fixed; duct tape won't work though the political classes hope it will allow them to limp through to another election

PS to those bloggers who occasionally advocate sticking your savings in the mattress: I hope you've read the story about the lady in Tel Aviv whose daughter bought her a new mattress and took the old one to the dump; they (and a lot of other people) are now desperately looking for the $million that was hidden in it; anyone seen Tel Avid dump; it's on the way out to the airport and very very large

The Bank is presently pursuing an 'insane' strategy of worthless money - no wonder they are panicking about yet another bubble. It is absolutely predictable even by a first year economics student.

The Bank MUST get interest rates up to 4 to 6 percent pronto. If they do not is it is not beyond the bounds of probability that the whole economy will implode again as they fear.

To run a stable economy you have to have money that is worth something, and not, as it is at present, worthless. And further, the only way to get from where we are today to that situation is to put interest rates up to where they should have been all the time!

Because the initial stimulous of the world credit crunch is to be found in the trade surpluses between the USA and China, the continuation of those surpluses carries the same risk that Banks holding those surpluses will lend imprudently, once again.

And that risk also carries the same possibility that Credit Rating agencies will respond to the Banks who pay them, and classify those imprudent loans once again as safe investments. That other Banks will, once again, buy those packaged loans because the ROI on them is above average for their rating....

Is it possible for recent history to be repeated so soon?

Being an economios editor at this time must be an absolute nightmare.

It isn't so surprising that there could be a stock market bubble for it was the Item club at the end of March who were advising everyone to put their money into stocks and shares.

This because of the massive amounts of new money that would have to be quantitively eased into economies and the impending inflation to follow.

Stock markets just love impending inflation.

However companies have to perform accordingly which they cannot in this recession so they will become overvalued again.

One bubble after another.

Stephanie,
I agree that Paul Tucker had more important things to say to the insurance industry on bank lending, QE and bank capital. He pointed to bank lending being subdued - banks deleveraging leading to a negative feedback loop via defaults to their capital. He says recovery cannot become rooted without bank lending. He points out that QE is not being used to create lending in large scale to the real economy but to revive credit markets without too much risk to the BoE and he aint sure that QE is working even though its increasing non bank financials money holdings - he hopes it will have an effect - alternative liquidity lifeboats for SME trade / working capital finance are being worked on to help this crucial sector. He points to the need coming at banks to raise their Tier One capital with subordinated debt intruments needing to be converted into equity.

In other words, he is raising red flags on issues that could kill recovery. Interesting though the 'long-grass' issue of international savings imbalances is intellectually ( not even the G20 have the answer to that but maybe the boffins at Finacial Markets Group LSE do)it is credit market impairment that is much more urgent to solve, in my view.

Steph, its not 'an intriguing conundrum' and it's not 'an interesting time to be an economist' - it's just bad bookkeeping:
China is doing OK now because it pays 10 Yen to its workers to make 10 Widgets. It swaps 2 Widgets for 2 Dollars as its a net Exporter and has 8 Widgets left to sell to its own people. They have 10 Yen to spend on 8 Widgets that cost 8 Yen so they can be sold for a profit to them. They can do this for year after year. You say the Chinese are saving a lot - well this is not savings as normal people understand it - money in the bank. It is a bookkeeping term that means year after year the accumulated profit on Chinese balance sheets goes up and up - it's got nothing to do with Yen in the bank - in fact in the example I gave, all the 10 Yen was spent and the Chinese businessman used the 10 Yen he received back to pay off the original 10 yen loan he took out to pay the wages - so there is not a Yen left anywhere but they do have savings the accumulated profit in the company. In the West we have the opposite entries : We give 2 Dollars to the Chinese for 2 Widgets and they give us the 2 Dollars back in exchange for our Mortgages, mines, T-bills assets real and financial so we can buy the widgets. This Uni-trade with China has left us in massive hock to and de-industrialised compared with this communist military super power it is worth noting that if you do a business deal in China there will be a member of the Chinese military in the room.
So now you think that we need more saving from the West to solve the problem. Now this cant be money savings in the bank because that is not the Savings that economic theories really refer to Economists savings are really just the bottom half of Balance Sheets besides if I paid you 1p and you saved it instead of spending it then I would not be making a sale and Id go bust.
So you think the Chinese Military will reverse this happy (from their perspective ) situation ? So they lose some value in their investments ! big deal - Chinese Uni-trade closes down more American factories than the Chinese Air Force ever could. Mr Tucker amazingly states : "If the Asian economies were to continue to save at an extraordinary rate but the Western economies increase their saving, as over time we must this is a bookkeeping impossibility - we cant all be savers ! (or is he saying that Brazil needs another go at being the Worlds biggest debtor again ?) Look its debits and credits : If China is increasing its savings continuing at an extraordinary rate then its our western T-Bills they are buying and we are going into more debt. However, if we used NEFS Net Export Financial Simulation then wed have all the advantage that China has - with their consumers being able to afford everything in the shops - but without the downsides.

I've said it before and I'll say it again, alot of what this government in particular seems to be doing with its economic recovery programme is re inflating the bubble!

Spend it quickly.

Money just became very cheap in China; their inflation expectations have clearly skyrocketed and it is about to shift from the global lender of last resort to the global consumer of last resort. And as we all know, its consumer expectations of inflation that matter more than the actual expansion of the money supply in an inflationary environment.

#6 Stanilic

"The thought occurred to me a couple of days ago that with all these apparent green shoots that we could actually recover from recession which is if anything a statistical definition, yet still have rising rather than declining unemployment.

The world has changed and we all need to catch up."

I'm not sure that what you refer to is actually a new phenomenon. In the recession of the early 90s, for example, unemployment carried on rising for quite a few years after the recession had statistically come to an end.

3. At 2:24pm on 10 Jun 2009, ghostofsichuan wrote:
" The rising tide lifts all boats theory doesn't account for those boats with heavy anchors and short lines."

That theory was always duff. Now I am no meterologist/oceanologist, but if a tide rises in one place (e.g. my harbour) it must surely be falling in another, unless the worlds supply of water expands and contracts along with the tides for some magical reason....

"If the Asian economies were to continue to save at an extraordinary rate but the Western economies increase their saving, as over time we must, in order to repair national and sectoral balance sheets, longer-term risk-free rates could again fall in order to bring about the counterpart expansion in investment. And, although it may seem far-fetched right now, that could give an upward impetus to asset prices over the medium-term. We would need to be careful not to mistake any such future developments for a miracle improvement in underlying economic and financial conditions. Indeed, internationally, we need to learn lessons about brewing risks from medium-term imbalances."

Lots of counterfactuals there. Is that all they can do? We can all play these what-if games. What's needed is reliable plans for measures over variables, i.e positive data to be plugged in which rather depends on answering the basic question as to how Western economies are to increase their savings if there's increasing unemployment, interest rates so low that avers lose money by saving, a falling, dumbed-down highly feminized population and nothing being manufactured which anyone else in the world wants to buy?

Put another way:- is the bright People's Republic of Marxist-Leninist-Stalinist China waging economic warfare aganist the dopey/girlie-anarchistic-Liberal-Democratic West, and winning, or what?

13. GlenisDevereux wrote:
Steph, its not 'an intriguing conundrum' and it's not 'an interesting time to be an economist' - it's just bad bookkeeping
===========
GlenisDelusional, will your dynamic spreadsheet solve climate change? Will it solve the middle east situation or the instability in Pakistan etc?

Instead of boring us rigid with it, maybe you should just email it to all the G20 Prime Ministers and tell them how simple the solution to imbalances in the Global Economy really is - it's just bad bookkeeping.

16 GHBRich

I am glad we can agree on this.

When will economists admit that they don't really know what's going to happen? I don't pretend to know either, but based on the observation that economies, stock markets and life in general move in cycles, I expect the recent low inflation and deflated markets will be much higher in 5 years time.

There! As accurate a prediction as you'll find anywhere in The City.

20 Stanilic

LOL!

I am not sure we do agree, however... I read your post as stating that a continuing rise in unemployment after an end to the technical recession would constitute some kind of 'false dawn'. I do not necessarily believe that to be the case, however, as it takes quite a long time for a revival in the underlying health of the economy to translate into falling unemployment figures.

Not that I'm saying our economy is now fundamentally healthy, you understand - I share many of the concerns Stephanie raises (in fact, as some posters have said, I think it is becoming increasingly difficult to know what a "fundamentally healthy" economy is). Rather that unemployment is bound to keep rising over the next few years, whether or not we have a genuine recovery.

Maybe the next G20 sumit should focus more on the economic regulation side of the world economy and less on the econimic stimulation side of things. All I know is that we cannot afford to go through this again in another 10 years or so, the price we will all have to pay in terms of higher taxes and reduced public services in order to bailout world capitalism is a price people will only pay once. If it all goes wrong in such a fundimental way again, driven by short term greed and lack of regulation then I think the global economy will be finished. The decission makers in the world need to keep their eyes on the ball and not let signs of recovery blind them to problems on the horizon, how they do it is up to them, but if they mess it up again I don't give much for their chances.

22 GHBRich

I was being a bit cheeky. I tend to view recessions in two ways. There is the technical aspect and there is the unemployment. I tend to get emotional about the unemployment as I have been a victim of a recession and am familiar with the immense difficulty it causes individuals. It has a starker reality than a set of numbers. I will never be an economist for the same reason I could never be an accountant.

To me a recession equals people on the cobbles: not nice and to be strenuously avoided.

#19 ThorntonHeathen wrote: will your dynamic spreadsheet solve climate change? Will it solve the middle east situation or the instability in Pakistan etc?
Well yes actually ! - a postman puts a pile of stuff through my door every day - so he can get some numbers - money. I put this junk mail in the bin and another fellow puts it in a landfill on Wednesdays - so he can get some numbers. They'd both starve without this game and the game is called the creating and shuffling waste as long as it has some numbers attached to it called money game - clever people call it economic activity - and now both have to continue to do this till they are 70 because of a shortage in numbers in the pensions and because some Puritans think that it's not fair that they can stop playing the waste game at 65 while other people have to go on with this game till 70 - imagine the climate impact of not having to play the waste game any more ! Will it solve the middle east situation or the instability in Pakistan etc youd be surprised ! If Germany had used NEFS in the 1930s and had not had a Financial crisis there would have been no Hitler, No Hilter then no Israel, No Israel then no Middle East Crisis, no Middle East Crisis then no Bin Ladin. Using NEFS now might be like using a vaccine after youve got the disease but it will prevent the next financial crisis causing chain-of-disaster-for-the- next-100-years mess and may go a long way to healing old wounds.
Re- maybe you should just email it to all the G20 Prime Ministers and tell them how simple the solution to imbalances in the Global Economy really is - it's just bad bookkeeping well if you are still cynical and think it is not just bad bookkeeping then what had Germany really run out of in the 1930s what had America really run out of in the Great Depression surely it was only numbers, if theyd ran out of real stuff then theyd still be broke you see - bad bookkeeping ! Otherwise than that Id be interested if you have the G20 Prime ministers Emails but Im not sure theyd get it, despite it being very simple. I have met a few politicians in my time and they are not very clever from a technical point of view (they are not meant to be technical experts anyway) Their advisors tend to be a bit like Steph sometimes very nice people but too over-trained, too financial, too 'the way to solve the real World problems is to apply what I learnt in University'. The reason I post on this site is to sort of try my ideas out in debate and see how well they apply them to the problems we face and see if people can see the weak points that I have missed and see where they really hold up. So far your only criticism is that its boring ! well its finance/economics/ bookkeeping of course its boring !

Peter Schiff talks about this issue amongst others in the following clip. The root of the problem is central bank "funny money" that they create in infinite quantities (if they want)

So...some are worried about a bubble developing in the stock market. Why is no-one worried that the current stock market is a bubble?

The price/dividend ratio for the S&P 500 is currently around 46. This compares with a long tern historic median of around 26. How smart do you need to be? Surely it is not so hard to spot the difference between 46 and 26.

Tell me, tell me. c´mon tell me the answer.

We don't want to go back to what was before - apart from the finnaciers and politicans. We don't know where we want to go and therefore haven't a clue about how to get there. Internationally all is confusion and no strong leads are being presented. Green shoots are reported but never materialise - bit like JJ's Behavioural Analysis being a viable control mechanism. The £ looses 30% of its value; then starts climbing back and we did nothing posititve. The UK and US adopt QE, Merkel screems it's a bad economic move and then the CEB do exactly the same. All governments sing the No Protectionism song and then race to save their banking sectors and/or manufacturing bases. The G20 meet, throw figures about, pose for pictures and then do nothing. Government borwoing in the UK goes through the roof but nobody knows where it is all going or what the 'figures' actually mean. As I said before it's all confusion.

But within all the confusion lies the opportunity to take the time to actually build a new reality. GHBRich and stanillic give us some clues as to where we may start.

GHBRich said, "it is becoming increasingly difficult to know what a "fundamentally healthy" economy is". Perhaps this should be the start point of our analysis. If we can identify in UK terms what a fundamentally healthy economy actually is we at last have a start point for our attempt to try and build one.

stanillic has pointed to the horrors of unemployment in his statement, " To me a recession equals people on the cobbles: not nice and to be strenuously avoided." To my mind this opens a discussion as to the purpose of our 'new' economy - it's social and ethical values. If we are not to repeat the mistakes of the past we need a new understanding of what we are trying to achieve. I make no apologies for stating that to me people are far more important than mere money. But it has to be openly debated. Do we want a more French model or something akin to LibertarianKurt's ideal?

This depresion/recession - call it what you will is the best opportunity that we have had for decades to totally re-think our reality and not just accept the 'given'. Whatever we do we will tread on other peoples toes but they will come to accept what we do. Do nothing and they will tread all over ours as we will truly be followers.

#7 "The world as a whole must move away from individuals building up large sums of personal savings to pay for their old age, to a system where Governments pay for adequate pay-as-you-go state pensions."

This is exactly the kind of pie-in-the-sky thinking that caused the massive black holes in our pension systems !! If there are no savings, be they individuals' or government, wherefore will the money come from to "pay-as-you-go" ?? Burden the next two generations with massive debts to "pay-as-you go" ?? Spend now and let the grandkiddies worry about your debts ?? Or are you advocating a Soylent Green style euthanasia for all the old people ?? Are you volunteering to be chucked into the recycling bin the day you turn 65 ??

#10 "And that risk also carries the same possibility that Credit Rating agencies will respond to the Banks who pay them, and classify those imprudent loans once again as safe investments. That other Banks will, once again, buy those packaged loans because the ROI on them is above average for their rating....

Is it possible for recent history to be repeated so soon?"

I think the point here is that those "loans" made by the creditor countries were not static loans. The creditor countries *WANT* to spend them, particularly on companies that have relevance to their respective economies !! However, as always, nationalistic protectionism rears its ugly head and many of these deals are scuppered by politicians, not by businessmen. So the loans keep on growing to the horror of the creditor countries.

In sheer self-defence, they are seeking another way out of holding massive amounts of loans from (poor) debtor countries that refuse to deal in good faith !! So they have hit on the one mechanism that the debtor countries *CANNOT* block - SDRs !!

China started the ball rolling with a 40 billion "loan" to the IMF in return for more SDRs. Now the Brazilians have got into the game with a 10 billion "loan" to the IMF !!



I believe the strategy behind this is to "dump" as much USD denominated "loan assets" on to the IMF as possible and let *THEM* recycle those "assets" before they become toxic !! If America defaults/devalues on those USD "assets", then the US will be kicked out of the IMF elite and turned into another third world country !! The same will probably happen to whatever minuscule amounts of Gilts held by these creditor nations !!

BTW, the difference between USD "loan assets" and Gilts is that Gilts are mostly held locally, so a devaluation of the quid will mostly affect and damage the local economy more than it would hurt anyone else !!

Good luck to Crash Gordon in trying to inflate his way out of his debts !! He will totally and utterly destroy the British economy !! With a PM like this, who needs terrorists !! Bin Laden must be gaping in awe and kicking himself for not thinking up such a simple way to destroy the Satanic West !!

#13 Strange as it may seem, the individual Chinese savings are among the highest in the world !! This has been a cultural thing for millennia; it's not a new phenomenon !! This trait was born out of a need to buffer themselves from droughts, floods, famines and wars and has continued to this day !! Thrift is in-bred into the Chinese genes and savings are a symptom of it !!

Carry that to a national level and you see 40% of USD debts in Chinese hands !! Much of the rest are in the hands of the *OTHER* thrifty East Asian nation - Japan !! :-)

#15 "Money just became very cheap in China; their inflation expectations have clearly skyrocketed and it is about to shift from the global lender of last resort to the global consumer of last resort. And as we all know, its consumer expectations of inflation that matter more than the actual expansion of the money supply in an inflationary environment."

Eh ??

#18 "a falling, dumbed-down highly feminized population"

Nowt wrong with that !! "Less men, more share" as my arithmetics teacher used to say !! Bring on them ladies now !! :-)

#25 "So far your only criticism is that its boring ! well its finance/economics/ bookkeeping of course its boring !"

One good reason why I couldn't wait to get out of that game !! :-)

#27 "The price/dividend ratio for the S&P 500 is currently around 46. This compares with a long tern historic median of around 26. How smart do you need to be? Surely it is not so hard to spot the difference between 46 and 26."

The price/dividend ratio is for mugs !! So is the P/E ratio !! To emphasise this, the P/E ratios during the dot.com bubble went through the roof !! The only reliable measure is how a company earns its money and how that money is distributed !! If a significant portion of that income is distributed in bonuses for unearned profits, then that company is in deep doo-doo, as exemplified by the various banks recently !! Those bonuses could, and did, turn out to be payments for failure !!

#28 "Merkel screems it's a bad economic move and then the CEB do exactly the same."

But Frau Nein has little control over the CEB !!

DEMOGRAPHIC/ECONOMIC GEO-POLITICS/WARFARE

ishkandar (#33) "#18 "a falling, dumbed-down highly feminized population"

Nowt wrong with that !! "Less men, more share" as my arithmetics teacher used to say !! Bring on them ladies now !! :-)"

It's not less men, it's a more 'feminized' population. Do you not understand what falling, dumbed down and 'short-termist' mean for an economy? Answer .... NO.

#38 fdd

"If we can identify in UK terms what a fundamentally healthy economy actually is we at last have a start point for our attempt to try and build one."

I would propose a definition of national wealth as: the true added value generated by the nation for the purpose of sustainable human development.

By "true added value", I would suggest along the lines of: taking raw energy inputs, and through the efficient consumption of energy to transform into productive outputs.

Efficiency: If you look at the national energy consumption figures from Tuesday's post #39, you will see evidence of energy inefficiencies (i.e. amount of energy needed to produce the same output).
Effectiveness: the other key point is "productive outputs", and this gets a bit more subjective. My initial suggestion is for 3 tiers: basic necessities (food, water, basic medicine's such as penicillin, heating etc.), borderline necessities (e.g. advanced medicines, regional transportation), and downright luxuries / extravagance (perfume, holidays abroad, plastic toys, reality TV shows).

There are some things we really really need, some we really do not need at all, and a whole mush of stuff in the middle which is marginally beneficial but suffers from diminishing returns (in effect an efficiency issue).

This is the crux of the sustainable human development point. If a large proportion of our wealth is being squandered on unnecessary tat, then we are wasting the gift of abundant natural resources.

As Soddy states, Wealth used to mean the state of being well, as healthy means the state of hale.

Now it is nothing more than a paper claim on debt, much of which is squandered on extravagant luxuries - a global scale "Senate fiddling while Rome burns".

#35 Ishkandar. You say the price/dividend ratio is for mugs and then go on to explain the problem with p/e ratios and cite the dot com bubble to support your case.

If people had looked at p/d then they would never have bought into dot com in the first place.

I am not suggesting that p/d is some kind of perfect or mystical investment signal. I am saying that you can calculate a long term average and compare that average with the situation pertaining today, and identify any diffferences. Those differences need explaining.

One explanation is that the stock market is still overpriced, and that it is still a bubble waiting to be burst. There are almost certainly other explanations. Given that system managers and system cheerleaders fail to provide these explanations then maybe the obvious explanation is the correct explanation.

38 Hawkeye Pierce
"Efficiency: If you look at the national energy consumption figures from Tuesday's post #39, you will see evidence of energy inefficiencies (i.e. amount of energy needed to produce the same output)."

I am beginning to think that the per capita BTU v per capita GNP comparison tables posted by Franksz yesterday #33 and re-stated in your #39, like most statistics, don't bear much scrutiny. By the way I see that you omitted Mongolia (in 2nd place) from your listing of inefficient countries by rank. So, the developed countries produce huge amounts of useless rubbish which inflates their GNP while Mongolia has (or had in 1995 I reckon) a largely subsistence economy which by definition is not counted in GNP. Kazakhstan was in the middle of massive Oil & Gas expansion and much of the energy was probably being used on developing infrastructure and upstream/downstream faciltiies. Both of the above comments surely apply to both India (less than 1/3 of per capita GNP of Kazakhstan) and China (less than 1/2 of K'stan).

IMO it compounds the error to assume that a sea-change in either the per capita GNP and/or per capita BTU of a country, will not render the comparison between the 2 a useless predictor of future "efficiency".

Hi Stephanie,

Re the Bernanke savings glut theory , Hume and Sentance ( BoE ) have written a paper pointing to the proposition that the savings glut was more a consequence of the credit boom than the cause - different angle to Tucker. The credit boom from mid 2000s was more to do with conduct of monetary policy and perception of declining risk rather than a savings glut. Interested to know what you think.
See
[Unsuitable/Broken URL removed by Moderator]