Tuesday, August 17, 2010

"South Korea... Will Thrive" in the Age of Global Capital Scarcity

Martin Hutchinson argues that "at some point in the near future we will face a world of capital scarcity, like the late 1930s in the United States, the early 1950s in Europe or the 1980s in Latin America" — A capital-scarce world. What does this mean?
    In a world of capital shortage, the countries where the shortage is least acute will do best. France, Germany and Italy, with double-digit savings rates, will outperform Britain, the United States, Canada and Australia, whose savings rates have consistently lagged. Japan, traditionally the home of high savings, will not benefit much because its savings have been dumped in the money pit of government debt.

    China, with a very high savings rate, will outperform India, where the savings rate is lower and much private sector saving is sucked into the government's excessive deficits. Chile, with privatized pensions and a high savings rate, will outperform the rest of Latin America, where savings rates are lower. Switzerland, with high savings and an immense capital base, will get richer still. Taiwan, South Korea and Singapore will thrive; Africa, including South Africa, will suffer.
Mr. Hutchinson says that "the new world to emerge thereafter won't be a great deal pleasanter except for the thrifty." He concludes, "Philosophically, if not financially, we should welcome the change."

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Blogger setnaffa said...

There will only be a scarcity of capital if we allow the government to control all of it...

12:52 AM  
Blogger The Western Confucian said...

... or once it becomes clear that most of it is fake, backed only by debt, created out of thin air by the government.

10:53 PM  

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