A Strange view has emerged recently from some US government and economic circles, which says high savings in emerging markets such as China and oil-exporting countries sowed the seeds of a global credit bubble.
The statement is both irresponsible and untenable.
The advocates of this view claim that different countries have different savings and investment tendencies, resulting in imbalances in the world economy.
They also say the emerging markets have exerted downward pressure on investment yields in recent years at a time of low inflation and booming trade and capital flows, driving investors in developed economies to turn to riskier investments.
First, the statement has an apparent logical shortcoming. High savings in emerging markets do not mean consumers and investors in developed economies can borrow money from them without misgivings.
More important, the high savings rate in emerging markets is not a reason for developed countries to loosen financial regulation and look on, arms folded, as financial institutions develop new derivatives and let financial bubbles balloon.
For the Chinese, the habit of saving originates from their long-time culture and the habit is part of their cherished virtues of diligence and thrift.
Furthermore, previous outbreaks of world and regional financial crises have proven that the high rate of Chinese savings, both public and private, have no causal relationship with the crisis.
The reasons for the current financial crisis lie in excessive consumption, high indebtedness and lack of financial regulation.
Addicted to borrowing
The United States should have recognized that borrowing from abroad for consumption and deficit spending at home was not a formula for economic success, The New York Times cited economists as saying.
Although the problem is widely recognized, Americans are likely to become more addicted than ever to borrowing foreign money to finance record government spending to revive the broken economy, they warned.
Some experts have also referred to the lack of ethics in the financial system as they tried to discover the causes of the crisis.
"We don't just need a financial bailout; we need an ethical bailout," wrote columnist and Pulitzer Prize winner Thomas Friedman in The New York Times. "We need to re-establish the core balance between our markets, ethics and regulations. I don't want to kill the animal spirits that necessarily drive capitalism - but I don't want to be eaten by them either."
The urgent task for the United States, the world's biggest and most important economy, is not to shirk its responsibilities, but find solutions for the crisis and realize balanced economic growth.
The international community needs to act together to curb the spread of the crisis and major economies should shoulder their responsibility by adopting proper economic policies and stabilizing their own and international financial markets instead of looking for someone outside to blame.
(Xinhua News Agency January 9, 2009)