Hurray, we have a new doomsday scenario: the savings glut

Nothing can inspire me more than a decent doomsday scenario with China as a major player. In my now hopelessly outdated book on "15 misunderstandings about China and the Chinese" (unfortunately, only available in German and Dutch) is dedicated a whole chapter on this always returning media game. The large number of doomsday scenario's I have seen have all two elements in common. First, they sound very plausible when they are first launched - although Gordon Chang proved this was not always the case. Second, none of them became true, although the current environmental doomsday scenario is not yet proven to be wrong.
Michael Pettis of the China Financial Markets is today on top of a very new variation: the savings glut. In short:

How does the savings glut work? In recent years we have seen a combination of a structural savings glut (mercantilist policies in a number of countries, especially in Asia, have included a rigid currency regime which exports high domestic savings) and a cyclical savings glut (commodity exporters, especially oil exporters, have seen export earnings grow much faster than imported consumption). The combination of these two has resulted in a vast building up of foreign currency reserves among the saving countries. The accumulation of foreign reserves is largely the consequence of accumulated trade surpluses, which because they imply total consumption that is less than total production, is the way in which domestic savings – forced or otherwise – is exported to the rest of the world.

The US has been saving the world in the past with unstoppable expenditures on consumerism. That seems to be over, Europe is not taking over this honorable task, so the world is tumbling into a financial crisis, unless Asian countries (read China) cut their savings and start spending US-style. That indeed seems to be unlikely, despite recent efforts by China to spend some of its trade surplus, but that is not going into more consumption.
The crisis will mostly be in the relations between the US and Europe, Pettis suggests. More details at this blog.