It is with some trepidation, as I am not an economist, that I write to register my disagreement with several points in your essay.
Right! A foreign policy expert yes, but then goes on to show they he indeed doesn't get it when it involves Economics.
First, you state 'Cheap money fuelled 'financial innovations' such as sub-prime mortgages and risky assets, which led to a crisis'. I beg to disagree. It is greed that led Wall Street to deceive investors with those unsound instruments.
If money isn't cheap, greed has limited avenues to gorge itself.
Second, you quote United States Federal Reserve chairman Ben Bernanke as saying that a 'global savings glut' was the cause of these global macroeconomic imbalances.
Mr Bernanke's argument is self-serving and disingenuous. He is trying to blame America's creditors when the fundamental problem is America's unsustainable deficits.
Well, America could have decided long ago not to trade so freely with others. There would not be these imbalances as a result. It takes too hands to clap. Stop pointing fingers. It wouldn't solve the problem. We are in this together.
Third, you argue that the reason why East Asians save so much is demographic. I do not agree. East Asians save because of our culture of thrift and out of prudence.
Do you think if Asians were provided with a comprehensive safety net, they would be saving like they had been? If no, why are our leaders ever so afraid of the welfare mentality? Looks like Asia is trying to persist the status quo with America, which is unsustainable.
If Asia keeps pushing the status quo, I am afraid if through some back luck, the Americans eventually conclude that Asia especially China is simply trying to weaken America with its "opium" of exports so that China can lead the world, this would be very troublesome. We don't want to get into such a situation.
The exchange of letters between the professors continues but I shall stop here.