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The Asian savings glut was one of the contributory factors to the credit crunch, and remains a key factor in the world economy. It refers to the cultural propensity for saving rather than consumption in many Asian societies, particularly China. This creates enormous reserves of money in the country's financial system which have tended in the last decade to flow to borrowers in the West, contributing to an environment of easy credit which sent western property markets loco on an orgy of easy money.

Combined with the West's readiness to become indebted, the savings glut was toxic; recognition of this simple dynamic allows you to understand the credit crunch in a far more fundamental sense than all the details about bankers' bonuses and mortgages. That money had to come from somewhere. It also underlines the possibility that credit crises of this sort might happen again.

There were other factors contributing to the credit bubble, ones we can control - interest rates were undoubtedly too low for too long, for example. But it's harder for the West to do anything about the Asian savings glut. A more balanced world would be one in which the Chinese consumer spent more and saved less, and we can hope for a cultural and political shift in this direction. But the shift is bound to be gradual and offset by the spectacular growth of the Chinese economy. Nor would such a world be without its problems, as Chinese consumption drove inflation and commodity prices upwards.

We are increasingly faced with a world where having our cake becomes incompatible with eating it: we can have low inflation OR sensible credit markets OR free trade. Scariest of all for the West, the decision as to which it is will probably be stamped "Made in China".