BEIJING – Future history books, depending on where they are written, will take one of two approaches to assigning blame for the world’s current financial and economic crisis.
One approach will blame lax regulation, accommodating monetary policy, and inadequate savings in the United States. The other, already being pushed by former and current US officials like Alan Greenspan and Ben Bernanke, will blame the immense pool of liquidity generated by high-savings countries in East Asia and the Middle East. All that liquidity, they will argue, had to go somewhere. Its logical destination was the country with the deepest financial markets, the US, where it raised asset prices to unsustainable heights.