really great read. makes you think http://www.weeklystandard.com/Content/Public/Articles/000/000/016/763ixjus.asp?pg=2 When people asked what fundamentally caused the financial crisis, my answer is not what they expect. I respond with one phrase--the fall of the Berlin Wall. By the early 1990s, after the collapse of the socialist model, emerging market economies such as China, India, Eastern Europe, and the commodity producers wanted to be like the West--capitalists. And they became pretty good at making their economies more productive. This had the effect of lowering real wage costs globally while setting up these economies as powerful exporters. Soon a global ocean of capital--of excess savings--was beginning to swirl around a liberalized worldwide financial system. Partly as a consequence of the Asian crisis of the late 1990s, most of these emerging market economies by the late 1990s adopted a new export-oriented model for success. They tied their currencies to the U.S. dollar and refashioned their economies as large export platforms. The target: The U.S. consumer who fairly quickly became the world's consumer of last resort. As large parts of the world set up shop as a giant, low-cost, export engine, the low saving U.S. consumer became almost addicted to consumption. As we kept consuming, many of the world economies began stockpiling record amounts of excess savings. This reliance on exports, in lieu of developing consumer-based economies, created enormous global savings imbalances. In China alone, excess savings in the form of central bank reserves quickly approached $2 trillion. The problem was that there were too few investment opportunities for so much capital.