Put in perspective the orders of magnitude involved

The famous "twin" deficits of the US economy budget deficit and deficit of the current balance of trade will now know developments in opposite directions: in view of the commitments made in the past months by the US Government, the budget deficit cannot, indeed, that widen, while, as a result of the ongoing rebalancing in international tradethe US current account deficit should it decline. Now nearly a decade, the US current account deficit could be offset by the use of the savings glut of several emerging countries whose principal was China. This support often operated by purchase of securities issued by the US Treasury. It is gradually reducing as show information available since last August. Directly or indirectly, the strong development of the credit, to which there was, was, for its part, the application of federal funds. The credit crunch and the reduction of U.S. imports related to entry into the crisis will be back at the same time and current deficit of the United States and its mode of funding. This means that in a future close, American national savings must largely finance the investment in the country, which the good is so important to the recovery of the economy.

In years past, the weakness of the American savings was due, not not the inadequacy of the companies, but, on the one hand, the strong decline in the savings of households over the years Reagan and, on the other hand, the importance of the public, still considerable deficits since the beginning of the century. How to enable the United States to balance savings and investment when the public sector deficits may only grow The first idea is, of course, to wish for a strong recovery of savings of households; a movement in this sense also appeared since the second quarter of 2008. Put in perspective the orders of magnitude involved. Before even the last it was calculated by measures announced, that the Treasury should borrow, each year, approximately 1,000 billion to deal with the various commitments made over the past months, particularly as regards financial institutions. Either. If these are households which, directly or indirectly, must be purchasers of these emissions, this implies an increase in savings of approximately 10 of their income: Americans should then also be ants as the French. The personal savings rate is certainly not a variable control in the hands of public authorities. Suppose however, for various reasons, such an increase happens: in the coming months, the US economy would be, because of the decline in consumption, plunged into a recession that could probably be close to that of the 1930s. The impact on the global economy would be very severe. The brutal rise of household savings rate is therefore provide an outcome favourable to the crisis.

If the emissions of the US Treasury are much less requested by investors international, and if the household savings rate back that gradually, an alternative enough classic is to go to a designated buyer: the Federal Reserve Bank; It will buy emissions from Treasury: it is colloquially called "make walk tickets snowboard". The last intervention announced by Henry Paulson guarantees mortgage $ 600 billion and 200 billion for the consumer credit uses even a still shorter circuit, as they will in fact directly granted by the Federal Reserve itself. This succession of commitments, sometimes by the US Treasury, sometimes by the Central Bank, is not without a few problems. It assumes that the credibility of the interventions of the Treasury-Bank tandem Central remains whole. Suppose, for example, that the legal bases of some recent initiatives of the Fed appear as fragile, it is the Central Bank Treasury tandem may in be destabilized. The ratio of public debt to GDP, indicated by the famous clock of Manhattan, is currently close to 75; It could quickly enter a dangerous zone in more than 80. However, the slightest concern about a possible degradation of us sovereign debt obviously have devastating consequences on the financial system and the economy of the United States: lift rates, devaluation of portfolio bonds, breakdown of the assets of many institutional, not to mention investors brutal consequences of such occurrence in stock market terms. Here again, close and close, the impact on the global economy would be formidable.

Thus appears as particularly sensitive the path of the economy American on a crest line between a call to the world's savings in the process of contraction and a very desirable rebound in household savings, but that should be measured. Finally, the Central Bank Treasury couple course must play its part to insurer ultimately to support the economy, but any clarity on the respective responsibilities of one and the other player. There is no doubt that Timothy Geithner, the future national Secretary of the Treasury, his elder Larry Summers, the future President of the Economic Council, and Peter Orszag, the Director of the budget, are fully aware of the risks to the economy American in the year which will soon open. Therefore, it will be the new team to introduce clearer in its various initiatives, a readability, in haste, sometimes failed to certain decisions of the former.