The broken engine and its reparation

After I came to the U.S. and witnessed the way Americans spent their money, I started to understand how "globalization" works: Americans consume, Chinese save. And that is the engine of the 21st century global economy. For a while, I thought this could work well for a decade or so, but apparently things were not walking, they were running, at a much faster speed than I assumed.

For one thing, the Chinese save too much. They sell everything now to the whole world, not just America, but they rarely spend. Why? one, income disparity is unbelievably high; second, without proper social safety net, no one dares to waste money; third, most resources are in the hands of monopolies, particularly housing, which squeeze people's wallet thin.

For another thing, the Americans spend too much. Getting money is easy, everyone, the Chinese, Japanese, Koreas, Europeans, Singaporeans, and Saudis, is willing to borrow money to the Americans. Why not, America is not african, you will get your money back, besides, who else lives on debt? The creativity of the Wall Street financial engineers makes borrowing almost an art with mathematical beauty. After all, human greed overwhelms all: if you can consume and enjoy today, why wait until tomorrow? Plus, there is a little war going on over there, costing $ 300 million a day. If Americans forgot to pay their ballooning mortgage and causing a lost of $400 billion, don't worry, Wall Streeters will just gas them with $3 a gallon and borrow from other sovereign funds to hedge off the problem.

However, this cannot last. The engine works only if the lender is generous and the debtor is conservative. Otherwise the harmony will be disturbed and the engine broken.
Now the chain reaction starts to unravel. When the Blackstone said they want money, CIC invested; when Morgan Stanley said they need money, CIC invested again; when Citi said they desire money, CDB stumbled. Before I get on, may I ask where are we heading?

The Chinese government may curb inflation by issuing executive orders and the American government may stimulate the economy by injecting $140 billion, but both may fail to achieve their goal, unless they can fix the engin: help Chinese to spend and Americans to save.
Of course, Dual-Core will be promising, with EU-China engine works together with the U.S.-China one, but be realistic, Europeans are thrifty and stingy, if the latter doesn't work, how long do youn think the former will last?