In fact, the household savings rate continues to rise.

Moreover, as Japan s society ages, the household savings rate will decrease dramatically.

In 2007, the average household savings rate was 3.8 and household debt 101 of annual disposable income, a typical level in Europe.

Household disposable income is about 60 of national income in China, and the household savings rate is close to 30 of disposable income.

Household savings are finally beginning to rise, which is good for the long run health of household finances, but disastrous for economic growth.

Government savings have fallen, especially in the United States and Japan, and household savings have virtually disappeared in some countries with housing booms.

Moreover, India has the highest household savings rate in Asia, at 32 of disposable income.

As a result, the household savings rate has risen from zero to 4 of disposable income.

The result was increased US spending and the descent of measured household savings into negative territory.

Similarly, broadening the range of available savings instruments could raise household disposable income and increase consumption.

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.

America s household savings rate was at levels not seen since the Great Depression, either negative or zero.

Of course, some worried about the collapse of the household savings rate, but few were overly concerned.

Put differently, the value of the dollar reflects total national saving, not just savings in the household sector.

America s domestic demand shortfall reflects rising savings, balance sheet damage in the household sector, unemployment, and fiscal distress.

In 1988, the household savings rate in China and the United States was roughly equal, at about 5 .

Most countries have introduced some form of forced savings (such as compulsory contribution to pension and provident funds) and provide tax incentives to stimulate long term household savings.

With a savings rate of barely 4 of GDP, the average US household is unlikely to be over saving.

Household income must rise, and, with more ample provision of social security, insurance, and services, precautionary savings should fall.

This reflects the declining share of wages in total GDP and the rising share of savings relative to household incomes.

Yet, by 2007, China s household savings rate had risen to a staggering 30 , compared to just 2.5 in the US.

Fostering the services sector could help in both reducing the rate of household savings and providing for more balanced growth.

The fundamental factors underlying the US external imbalance are large fiscal deficits and low household savings, owing to excessive financial leverage.

The fundamental factors on the Chinese side are high corporate and household savings, together with some distortion of resource utility prices.

Household savings are also encouraged by efficient capital markets, prudent fiscal and monetary policies, a strong legal system and good governance.

Income growth and a lower household savings rate are essential to the shift in China s growth model, and each presupposes key reforms.

The economy can then use household savings (with appropriate financial intermediation) to finance corporate and government investment, rather than the US government.

Of course, some worried about the collapse of the household savings rate, but few were overly concerned. In one of his last articles, Milton Friedman wrote that savings nowadays took the form of houses.

If that high level of government borrowing occurs, it will absorb all of the available household savings even at the current elevated level.

As a result, the country s household savings rate will decrease dramatically, making it increasingly difficult for the private sector to finance budget deficits.

10. Africa has been experiencing a decline in its own savings rate (government, household and corporate), while net factor payments abroad have increased.

Widening external and domestic imbalances, higher oil prices, tightening monetary policy, less stimulatory fiscal policy, a moderation in productivity growth and the combination of low household savings and mounting household debt are all contributing to the slowdown.

A savings rate of 50 of GDP is too high under any circumstances, and household consumption equivalent to 35 of GDP is too low.

Concurrent with diminishing labor income, government imposed ceilings on bank deposits the primary savings vehicle for most households have held down household capital income.

It has also driven up corporate savings, because firms earnings are growing faster than household income and (and, for that matter, faster than overall GDP).

A low rate of population growth is cited as being more favourable to growth in per capita income, which is likely to result in higher growth rates in the savings ratio and in the total volume of household savings.

Unfortunately, as a result of the private sector deleveraging and an increase in household savings, the US economy, driven by debt and consumption, slid into recession.

And, reflecting the aging of Japanese society, the household savings rate itself will decline dramatically, making it difficult for the private sector to finance annual budget deficits.

(e) Support to developing countries and transitional economies in reforming the financial sector and increasing the contribution of household savings in the mobilization of domestic financial resources.

Likewise, there is also virtually no credit card debt in Germany, or other reasons for US style household indebtedness. A normal German household is not on its last financial legs, and is therefore able to compensate for income losses by adjusting its savings.

The benefits of tax cut fueled growth would trickle down to all policies that have become fashionable in Europe and elsewhere, but that have failed. Tax cuts were supposed to stimulate savings, but household savings in the US have plummeted to zero.

Turkey has also amended its tax laws to penalize excessive external borrowing by non financial firms and to introduce significant incentives aimed at encouraging long term household savings.

I think it starts household by household, under the same roof.

This, of course, is just the story of subprime mortgages in another guise. The result was increased US spending and the descent of measured household savings into negative territory.

Savings