Seeking Alpha Seeking Alpha Portfolio App for iPad  Did the
"Savings Glut" Just Go Into Reverse?  Shortly before he handed
the mess he had crated to Ben Bernanke (who is now busy creating
an even bigger one), Alan Greenspan muttered something about a
"conundrum" with regard to long term Treasury bond yields. The
conundrum at the time was 'why does the bond market not sell off
in view of the Fed hiking short term rates'?  The so-called
conundrum created an excellent excuse allowing the Fed to deny
its responsibility for the housing bubble. See, the bubble
wasn't the Fed's fault, since the Fed was evidently not
responsible for long term rates staying low. The culprit was a
so-called "savings glut", created by evil savers in Asia. Now,
it is true that a great many Asians are saving a lot – they
always have. It's a mentality thing. In fact, the global savings
rate was higher, on average, in the 15 years preceding the
housing bubble than during the housing bubble (although, as you
will see below, the "savings rate