Bond Outlook November 4 2009

What a remarkable turn of events: the Americans, British and Irish are now saving a greater percentage of their income than the Germans! We can only cheer them on. A basic component of global rebalancing is that surplus countries like Germany (plus most of the developing world) spend more, and the deficit countries, like the three mentioned, spend less. Do not, for a moment, think that this is the result of clever government policy; rather be thankful that market forces can bring about changes for the better despite every attempt by governments to thwart them.

Household savings in particular, and private sector savings in general, are now playing a bigger part in financing government deficits.