Years ago I argued that the Krugman/Bernanke thesis blaming an Asian savings glut for the US sub-prime crisis, and hence the broader GFC, was bogus (see also here). The Australian's David Uren reports today that none other than the global bank to the central banks--ie, the Bank for International Settlements--has similarly concluded that the Krugman/Bernanke claims are wrong:
"THE elevated level of savings in Asia and global payments imbalances had nothing to do with the global financial crisis or the unusually low world interest rates that preceded it. The argument that they did, advanced by US Federal Reserve chairman Ben Bernanke, has diverted attention from the root cause, which is the unconstrained ability of financial institutions to create credit on a global basis, according to an explosive new paper by the research director at the Bank for International Settlements, Claudio Borio."
