As Japan Stops Saving, a Crisis Looms
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June 7 (Bloomberg) -- With their declining household-savingrate, Japanese consumers are no longer both financing governmentdeficits and sustaining their nation’s current-accountsurpluses. How is the gap being filled?
The current-account balance can be expressed as thedifference between gross national saving by consumers, businessand government, and total gross investment by those sectors. Inthis context, gross refers to measures before the subtraction ofcapital consumption or depreciation. If the balance is positive,as in Japan, saving exceeds investment needs and the rest mustbe exported. If it is negative, as in the U.S., saving isinsufficient to finance domestic investment and funds need to beimported.