Behind the "Global Savings Glut"

A recent article in The Arab Times seems to shed some light on where all the money sloshing around the world creating asset bubbles is coming from:

We in Kuwait seem to have run out of ideas for the time being and our past generations were more creative and looked deeper into our human resources to give their best. The overseas investments have their limits and it is time to seriously think of ways of making and creating new job opportunities for our youngsters and improve their capabilities and abilities. This is the only way to move forward as our financial resources are beyond our abilities and capabilities. It may take some time to come with the right answers but this will not happen without passing some laws through our parliament. Most importantly the land utilization law and liberalization laws to allow the private sector to move forward. The government owns more than 95 percent of the Kuwaiti land and with the BOT law still under revision almost all projects have been shelved awaiting the new laws to be approved.

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What's Bernanke going to do during the housing crash?

A Recent NY Times article on the Japanese Housing Bubble got me thinking. Especially this quote: Japanese economists say the United States is not likely to suffer a decline that is as severe or long-lasting as Japan's, because they see a more skilled hand at the tiller of the American economy: the Federal Reserve. Japan's central bank, the Bank of Japan, failed to curb the stock and real estate bubbles until mid-1989, when it was too late and prices were sky-high, they said. Translation: It's different this time! Is it really? Let's listen to some words from Mr Bernanke : But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to...

Why there are fewer people in engineering in the U.S : Money

There have been all kinds of articles recently about how the United States is losing its scientific edge because fewer people are going into the sciences and engineering. There is a great deal of handwringing and people talking about the anti-intellectualism of our country, its poor schools, etc and all sorts of wild guesses as to why this is happening. Well India has plenty of anti-intellectualism, poor schools, etc but they are turning out a lot of engineers. The real reason is that being an engineer in the United States does not mean you're going to get rich relative to your real estate speculating condo flipping peers. Let's look at some facts: The International Herald Tribune says that the average wage for an experienced programmer in India is $11,423 a year. The average wage for an experienced programmer in the U.S is $83,000 a year. However the average per capita income in India is $3,100 and in the U.S it is $40,100 . Per capita income is a good indicator of t...

Why there will be no hyperinflation

I have been reading the inflation/deflation debate for some time now on various parts of the web. The inflationists insist that we will collapse like Wiemar. The deflationists insist that we will collapse like Japan. The memory of the 1970s inflation is strong in many an old gold curmudgeon, so the inflationists seem to be more prevalent. I will in this essay attempt to argue that hyperinflation will not happen if global commodity markets remain priced in dollars. The reason for this is that if inflation increases, the rest of the world will bid commodities up drastically, especially oil, and severely throttle U.S economic growth, leading to a more restrictive monetary policy. Hyperinflation always happens due to a foreign exchange crisis. The population, sensing a high level of inflation, rushes to change their earnings in for real goods or foreign currency. In the case of Wiemar, or Argentina, the rest of the world is largely unaffected. They see their currencies drastically...

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