Bhavesh's Tryst

And how would you explain this economy


Japanese save a lot. They do not spend much. Also, Japan exports far

more than it imports. Has an annual trade surplus of over 100

billions. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports.

Has an annual trade deficit of over $400 billion. Yet, the American

economy is considered strong and trusted to get stronger.


But where from do Americans get money to spend? They borrow from

Japan , China and even India .

Virtually others save for the US to spend. Global savings are mostly
invested in US, in dollars.


India itself keeps its foreign currency assets of over $50 billion in

US securities. China has sunk over $160 billion in US securities.

Japan 's stakes in US securities is in trillions.


Result:

The US has taken over $5 trillion from the world. So, as the world

saves for the US - It’s The Americans who spend freely. Today, to keep

the US consumption going, that is for the US economy to work, other

countries have to remit $180 billion every quarter, which is $2

billion a day, to the US !


A Chinese economist asked a neat question. Who has invested more, US

in China , or China in US? The US has invested in China less than half

of what China has invested in US.



The same is the case with India . We have invested in US over $50

billion. But the US has invested less than $20 billion in India .



Why the world is after US?



The secret lies in the American spending, that they hardly save. In

fact they use their credit cards to spend their future income. That

the US spends is what makes it attractive to export to the US . So US

imports more than what it exports year after year.



The result:

The world is dependent on US consumption for its growth. By its

deepening culture of consumption, the US has habituated the world to

feed on US consumption. But as the US needs money to finance its

consumption, the world provides the money.



It's like a shopkeeper providing the money to a customer so that the

customer keeps buying from the shop. If the customer will not buy, the

shop won't have business, unless the shopkeeper funds him. The US is

like the lucky customer. And the world is like the helpless shopkeeper

financier.



Who is America 's biggest shopkeeper financier? Japan of course. Yet

it's Japan which is regarded as weak. Modern economists complain that

Japanese do not spend, so they do not grow. To force the Japanese to

spend, the Japanese government exerted itself, reduced the savings

rates, even charged the savers. Even then the Japanese did not spend

(habits don't change, even with taxes, do they?). Their traditional

postal savings alone is over $1.2 trillion, about three times the

Indian GDP. Thus, savings, far from being the

strength of Japan , has become its pain.



Hence, what is the lesson?



That is, a nation cannot grow unless the people spend, not save. Not

just spend, but borrow and spend.

Dr. Jagdish Bhagwati, the famous Indian-born economist in the US , told

Manmohan Singh that Indians wastefully save. Ask them to spend, on

imported cars and, seriously, even on cosmetics! This will put India

on a growth curve. This is one of the reason for MNC's coming down to

India , seeing the consumer spending.



'Saving is sin, and spending is virtue.'



But before you follow this Neo Economics, get some fools to save so

that you can borrow from them and spend !!!