Obama Foreclosures’ Solution and China Savings

Posted on March 12th, 2009 by saman

The democrats in the U.S. Senate have announced they have reached a compromise on the economic revival, compromise aiming at adopting a plan of 780 billion dollars, compared to the 900 billion originally proposed by Barack Obama. However, many Republican senators have remained hostile over the revival plan. According to the statements of John McCain, the day when the text will be adopted, will be the darkest day for America. Also, Mitch McConnell, the Republican minority leader, refused the compromise, saying that the re-launching plan in the new shape will have a cost of at least 827 billion dollars, taking into account all its amendments, while Republicans aim is that the plan does not exceed 800 billion dollars.

The U.S. President Barack Obama criticized the U.S. Senate that he called unforgivable and irresponsible facing the economic foreclosures crisis because the delay to give their consent to the plan of re-launch. It is inexcusable and irresponsible that the will be blocked and delayed, while millions of Americans are sacked or lose their foreclosed homes, Obama said.

This is the second time when the new U.S. president criticized the U.S. officials, after he has argued with the Republicans who do not agree with the economic plan proposed by him. The plan aims to massive investments in key sectors of the economy and it involves spending no less than 900 billion dollars. The U.S. President Barack Obama has launched a severe warning to Republicans who keep opposing his plan re-launch the economy.

The new president dropped his sympathetic and calm tone that he had before being elected and addressed to those who, in increasing number, criticize his plan which amounts to 900 billion dollars. They say that the investment envisaged in this plan is worthless.

The foreclosures crisis cannot be solved by small touch-ups in the corners or pieces of action, said the U.S. president, showing that basic issues cannot be avoided, such as the huge costs of medical insurance.

Americans consume more, whereas Chinese save more. This is the conclusion of a study of the International Monetary Fund, which shows that the Chinese savings grew by 7% in a period of 10 years. Together with the company’s savings, they represent more than half of GDP. In order to find a sustainable balance, Americans and Chinese as well have to make a step in the right direction. Forced by the foreclosures crisis, Americans have lowered the consumption levels. For the Chinese, however, the foreclosures crisis has meant a step in the opposite direction: they save increasingly more.

According to IMF, the Chinese economy registered a growth with all age categories, but those who have saved more were young people up to 25 years old and elderly people.

Economists have expected that an increase in the Chinese revenue to lessen the savings rate, but the report shows that they were wrong. All the experts in economics are in agreement that a higher consumption of the Chinese would have only advantages. If 86% of them are owners of houses, their quality is often low because of the fact that instead of investing in the quality housing, they prefer to put money aside.