European and Asian investors have been rushing into the United States bond market, spurred by a global glut of savings that has reached record levels.
Running from near-zero interest rates at home, foreign buyers are piling into the booming market for corporate bonds, including high-grade debt securities issued by the likes of IBM and General Electric and riskier fare churned out by energy and telecommunications companies.
A growing number of economists are concerned that this flood of money may inflate the value of these securities well beyond what they are worth, potentially leading to a market bubble that eventually bursts.
More broadly, however, these economists fear that an excess of ready cash in Europe and Asia is on the rise, which could keep a damper on global growth prospects.
That is because the cash, instead of being spent on building bridges in, say, Germany, or individual shopping sprees in China and Japan, is accumulating and being recycled into global capital markets, keeping interest rates artificially low as investors chase after returns.
And again, economists say, the burden is placed on the United States, with its still fragile economy, to be the growth engine for the world.
“Asia and Europe keep exporting their savings to the rest of the world,” said Brad W. Setser, an expert in global financial flows who worked at the United States Treasury from 2011 to 2015. “All this money sloshing around looking for a home is not healthy — it indicates a real lack of demand in other parts of the global economy.”
The surge in flows echoes a wave of investment in the years right before the financial crisis, when mostly European investors snapped up billions of dollars of mortgage-backed securities before the American housing market imploded.
The current numbers are also arresting.
According to Mr. Setser’s figures, about $750 billion of private money has poured into the United States in the last two years alone. About $500 billion, he calculates, reflects European and Asian investors buying United States Treasury securities, bonds issued by Fannie Mae and debt issued by American companies.
The rest comes from American institutional investors unloading their zero-returning European bonds and looking for some extra yield closer to home.
The culprit, Mr. Setser argues in a new paper for the Council on Foreign Relations, where he is a senior fellow, is the biggest global glut of savings ever, driven by cash-hoarding in counties like China, Taiwan and South Korea.
“There is a glut, and the glut isn’t healthy,” Mr. Setser said.
The philosophical grandfather of this global savings glut is Ben S. Bernanke, former chairman of the Federal Reserve, who coined the phrase in 2005, before he became chairman.
There are economic theories that daze and confuse, thanks to their opacity. And then there are a few that define a moment in time by explaining why asset markets overreach and implode.
In September 2007, as the financial crisis was beginning to take shape, Mr. Bernanke gave a speech in Berlin in which he warned of the dangers that excessive global savings posed to the United States economy.
Mr. Bernanke cautioned that an accumulating cash pile in fast-growing countries like China was keeping global interest rates low and steering money into risky investments.
Within months, investment banks in the United States began their death march as the once-soaring market for mortgage securities collapsed.
Over time it became accepted in academic and policy circles that the global savings glut that Mr. Bernanke had described played a crucial role in the boom and eventual bust of the housing bubble in the United States.
Now, nearly a decade after Mr. Bernanke’s warning, Mr. Setser and others are making the case that this cash pile is as large and dangerous as ever, driven by a persistent rise in excess savings in China and elsewhere in Asia, and in Europe, with Germany leading the way.
Not everyone subscribes to the savings glut theory, of course, especially not those nations that are sitting atop these piles of cash and facing pressure to take action, as Germany is.
Their opposing view holds that it has been the reckless money-printing ways of the global central banks (jump-started by Mr. Bernanke himself) that pose a threat to the global economy.
Still, the total sum of the savings glut is a stunning number — $1.2 trillion — a bit above what it was in 2007 when Mr. Bernanke warned about it. Three-quarters of it comes from China and other Asian dynamos.
The rest comes from large savers in Northern European countries like Germany and the Netherlands, replacing oil producers in the Middle East that have seen their cash piles erode with the decrease in oil prices.
In 2005, when Mr. Bernanke introduced the thought that there could be a downside to all this saving overseas, the American housing market was still robust and his remarks did not quite resonate.
It is easy to see why, given that the problem, as outlined by Mr. Bernanke, was not having too much debt, but having too much cash.
Past global blowups, like Mexico’s in 1994, and Southeast Asia’s in 1997 and 1998, were often stories of fast-growing economies running up debt and then running out of money.
Now, Mr. Bernanke was proposing, the danger was that these and similar nations were safeguarding cash by increasing exports and not investing as much as they should, with the result being a savings surge.
Recently, criticism has been directed toward large developed economies like Germany and other big savers in Europe like the Netherlands for allowing their current-account surpluses — essentially a country’s cash on hand after investments — to increase more than fourfold since the financial crisis, to $488 billion today.
But Mr. Setser in his paper contends that the sharp upswing in East Asian surpluses has been less noticed.
That is because, he says, even with China’s tremendous investment binge during recent years, its savings rate is still near 50 percent — which is just too high a level for the world economy.
“This is a big problem,” said Nouriel Roubini, an economist at New York University who was recognized for his early warnings about the 2008 crisis. “There is no way to force those who are oversaving to spend more.”
All of which hangs like a pall over the global economy, depressing interest rates and prospects for growth.
“Bernanke is even more right than he was in 2005 and 2007,” Mr. Setser said.
While no one is saying yet that the flood of investment has created an asset bubble similar to that of 2008, market participants accept that certain corners of the market, like junk bonds, have had a very nice ride of late.
Ken Monaghan, who oversees high-yield bonds for the global fund manager Amundi Smith Breeden, says that he is seeing a surge in interest from Asian and European insurance companies and pension funds — many of them conservative clients not known for dabbling in these sorts of securities.
“It has really caused spreads to move,” he said, using Wall Street jargon to describe what happens when the interest rates of these bonds decrease as investors pile in. “We are seeing institutional investors come to us and ask for levels of risk that they have never asked for before.”
Glossary
spur [sp3:(r)] : ~ sb/sth (on) (to sth/to do sth) 원동력[자극제]이 되다, 자극하다 / (비유적으로) 박차를 가하다
glut [glʌt] : ~ (of sth) 과잉 / [주로 수동태로] 과잉 공급하다
a record level : 기록적 수준
pile [paɪl] : (물건을 차곡차곡) 쌓다[포개다] / (…에 ~을) 쌓다[집어 얹다/넣다] / (비격식) (많은 수의 사람들이) 우르르 가다
pile into = crash into : ~와 충돌하다 / to go in or out of somewhere without order or control
high-grade : [명사] 우수(한 것); 우수한 혈통의 소 따위
debt securities : [명사] 부채증권
flood [flʌd] : [C] ~ (of sth) 쇄도, 폭주, 홍수
inflate [ɪn|fleɪt] : (가격을[이]) 올리다[오르다]
well beyond : (시간·장소·능력·범위를) 훨씬 넘어선
market bubble : 시장거품
more broadly : 보다 광범위하게
excess [ɪk|ses] : (어떤 정도를) 지나침, 과도, 과잉
ready cash : (비격식) (즉시 쓸 수 있는) 현금
be on the rise : (물가 따위가) 올라, 오름세에 / 증가하고 있다
put(keep) a damper on : ~에 찬물을 끼얹다
prospect [美|prɑ:spekt] : (어떤 일이 있을) 가망[가능성] / [pl.] prospects ~ (for/of sth) (성공할) 전망
spree [spri:] : 흥청망청 하기, 흥청거리기
accumulate [ə|kju:mjəleɪt] : [타동사][VN] (서서히) 모으다, 축적하다
global capital markets : 세계 자본 시장
chase [tʃeɪs] : [타동사][VN] ~ (after) sb/sth 뒤쫓다, 추적하다
return [rɪ|t3:rn] : [U , C] 수익
fragile [|frӕdƷl] : 부서지기[손상되기] 쉬운 / 취약한, 허술한
saving : [pl.] savings 저축한 돈, 저금, 예금
treasury [|treƷəri] : [sing.+ sing./pl. v.] the Treasury (영국・미국・ 일부 다른 국가들에서) 재무부
slosh [slɑ:ʃ] : [자동사][V] (액체가) 철벅거리다; (용기 밖으로) 철벅 튀어 나오다
slosh around : 물 쓰듯 할 정도이다
indicate [|ɪndɪkeɪt] : (특히 간접적으로) 내비치다[시사하다]
surge [s3:rdƷ] : (물가・수익 등이) 급등[급증]하다
flow [floʊ] : ~ (of sth) 계속적인 공급[생산], (공급・생산품의) 흐름[이동]
echo : [타동사][VN] (사상・의견에) 공명하다[반향을 보이다]
wave [weɪv] : [C] (수많은 사람・사물들의) 물결
snap something up : (값싼 물건·몹시 갖고 싶던 것을) 덥석 사다[잡아채다]
mortgage-backed securities : [명사] 모기지 담보증권(주택용이나 상업용 부동산을 담보로 하는 대부채권을 유가 증권화 한 것)
housing market : 주택 시장
implode [ɪm|ploʊd] : 자체적으로 파열되다, 폭파하여 안쪽으로 붕괴하다 / (조직・시스템 등이) 결딴나다, 붕괴되다
arresting [ə|restɪŋ] : (격식) 시선을 사로잡는, 아주 매력적인
pour [pɔ:(r)] : [자동사][V + adv. / prep.] (대량으로계속해서)쏟아져 들어오다[나오다]
pour into : …에 흘러 들어가다
Fannie Mae : [미] 연방 저당권 협회(Federal National Mortgage Association)의 통칭; (이 협회가 발행하는) 저당 증권
institutional [|ɪnstɪ|tu:ʃənl] : [주로 명사 앞에 씀] 기관의; 보호 시설의
unload [|ʌn|loʊd] : (자동차・선박 등에서) (짐을) 내리다 / (비격식) (책임을 다른 사람에게) 떠넘기다 / (비격식) (특히 불법으로・좋지 못한 것을) 없애다[처분하다]
yield [ji:ld] : [C , U] (농작물 등의) 산출[수확]량, 총수익
culprit [|kʌlprɪt] : 범인 / (문제를 일으킨) 장본인
senior fellow : 선임연구원
hoard [hɔ:rd] : [자,타동사][V, VN] (특히 비밀리에 많은 돈・음식・귀중품 등을) 비축[저장]하다
philosophical [|fɪlə|sɑ:fɪkl] : 철학의, 철학에 관련된 / (호감) 달관한 듯한, 냉철한
coined the phrase : 용어를 만들다
daze [déiz] : 멍하게 하다; 눈부시게 하다; 현혹시키다 / [a ~] 현혹; 멍한 상태; 눈이 부심
opacity [oʊ|pӕsəti] : (전문 용어) (유리・액체 등이) 불투명함 / (격식) (말・태도 등이) 불투명함[불분명함]
asset markets : 자산 시장
overreach [|oʊvər|ri:tʃ] : ~ (yourself) (지나치게 욕심을 내다가) 도를 넘다
take shape : 형태를 갖추다[구체화되다]
pose [poʊz] : [타동사][VN] (위협・문제 등을) 제기하다
excessive [ɪk|sesɪv] : 지나친, 과도한
steer [stɪr] : [타동사][VN + adv. / prep.] (영향력 등을 발휘하여) 이끌다[몰고 가다]
death march : [명사] 죽음의 행진(포로들의 도보 행군)
march [mɑ:rtʃ] : 행진[행군]하다, 행군하듯 걷다
soar [sɔ:(r)] : (가치・물가 등이) 급증[급등]하다[치솟다]
collapse [kə|lӕps] : [자동사][V] (가치가) 폭락하다[붕괴하다]
circles : (주의, 목적 따위를 같이하는 사람들의) 집단, ~계(界)
play a role : 역할을 맡다, 한몫을 하다
crucial [|kru:ʃl] : 중대한, 결정적인
boom [bu:m] : ~ (in sth) (사업・경제의) 붐, 호황
eventual [ɪ|ventʃuəl] : [명사 앞에만 씀] 궁극[최종]적인
bust [bʌst] : 실패작
persistent [pər|sɪstənt] : 끈질긴, 집요한 / 끊임없이 지속[반복]되는
leading the way : 앞장 서다, 솔선하다; 안내하다
subscribe [səb|skraɪb] : [자동사][V] ~ (to sth) (단체에 유료 회원으로) 가입하다; (자선 단체에 정기적으로) 기부하다
atop [ə|tɑ:p] : [영국 영어에서는 구식 또는 문예투] (특히 美) 꼭대기에, 맨 위에
reckless [|rekləs] : 무모한, 신중하지 못한; 난폭한
sum [sʌm] : [C] [주로 단수로] ~ (of sth) 합, 합계, 총계
stun [stʌn] : (특히 머리를 때려) 기절[실신]시키다 / 망연자실하게 만들다
/ 큰 감동을 주다
stunning [|stʌnɪŋ] : 굉장히 아름다운[멋진] / 깜짝 놀랄, 너무나 충격적인, 전혀 뜻밖의
dynamo [|daɪnəmoʊ] : 다이너모, 발전기 / (비격식) 정력[패기]이 넘치는 사람
saver [|seɪvə(r)] : 절약가, 저축인
replacing : 제자리로 되돌리는, 변제하는, 대체하는
replace [rɪ|pleɪs] : (다른 것의 기능을) 대신[대체]하다 / (다른 사람・사물을) 대신하다 / (낡은 것・손상된 것 등을) 바꾸다[교체하다]
erode [ɪ|roʊd] : (비바람이[에]) 침식[풍화]시키다[되다] / (서서히) 약화시키다[무너뜨리다]; 약화되다[무너지다]
downside [|daʊnsaɪd] : [sing.] 불리한[덜 긍정적인] 면
robust [roʊ|bʌst] : 원기 왕성한, 팔팔한 / (기구 등이) 튼튼한[강력한] / (체제・조직이) 탄탄한 / 씩씩한, 투지 넘치는; 확신에 찬
remark [rɪ|mɑ:rk] : [C] (말이나 글로 의견・생각 등을 표하는) 발언[말/논평/언급] / [U] (구식 또는 격식) 주목(할 만함)
resonate [|rezəneɪt] : (…을) 상기시키다[떠올리게 하다]; (…의) 공명을 받다[반향을 불러일으키다]
given that : ~을 고려하면
outline [|aʊtlaɪn] : ~ sth (to sb) 개요를 서술하다 / [타동사][VN] [주로 수동태로] 윤곽을 보여주다[나타내다] / 개요, 윤곽
blowup : 파산; 파멸
run something up : (공과금·부채 등이) ~만큼 쌓이도록 두다 / 급격히 오르다; 액수가 갑자기 많아지게 하다
criticism [|krɪtɪsɪzəm] : [U] 비평, 평론 (활동)
surplus [|s3:rpləs] : 과잉 / 흑자
current-account deficit(surplus) : (증권·금융) 경상수지 적자(흑자)
fourfold [fɔ́:rfòuld] : 4중(四重)의[으로], 네 겹의[으로]; 4배의[로]
contend [kən|tend] : (격식) (특히 언쟁 중에) 주장하다 / [자동사][V] ~ (for sth) (~을 얻으려고) 다투다[겨루다]
upswing [|ʌpswɪŋ] : ~ (in sth) (어느 정도의 기간에 걸친) 호전[상승/증가]
binge [bɪndƷ] : (비격식) (특히 음식을 먹거나 술을 마시며) 한동안 흥청망청하기, 폭음[폭식]하기
hang [hӕŋ] :
simile [|sɪməli] : [C , U] (전문 용어) 직유
pall [pɔ:l] : [주로 단수로] ~ of sth 짙은 먹구름 같은 ~ / 관을 덮는 천
hangs like a pall over : ~ 위에 짙은 먹구름이 낀 것 같은
corners = parts, areas
of late = lately, recently
junk bond : (상업) 정크 본드(수익률이 아주 높지만 위험률도 큰 채권)
oversee [|oʊvər|si:] : (over・saw / -'sOː / over・seen / -'siːn /) (작업・활동이 제대로 이뤄지는지) 감독하다
high yield bonds : (경제) 하이일드 채권 / 고수익채권
pension funds : 연금 기금
dabble [|dӕbl] : ~ (in/with sth) (스포츠・활동 등을 오락이나 취미 삼아) 조금 해보다[잠깐 손대다]
cause :
spread [spred] : [U] 확산, 전파
ask for somebody/something : (누구를 만나거나 어디를 가기 위해) ~에 대해 묻다[~를 찾다]
level of risk : 위험 수위
vicious circle : 악순환
vicious circle : 악순환
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