Bernanke's speech on Global imbalances and the Global savings glut - an impressive essay on the state of global economics. Bundesbank lecture:
...as a key driving force a large increase in net desired saving (that is, desired saving less desired domestic investment) in emerging-market and oil-producing economies, a change that transformed these countries from modest net demanders to substantial net suppliers of funds to international capital markets. This large increase in the net supply of financial capital from sources outside the industrial countries is what, in my earlier remarks, I called the global saving glut.
...although the U.S. current account deficit is certainly not sustainable at its current level, U.S. liabilities to foreigners are not, at this point, putting an exceptionally large burden on the American economy. The net international investment position (NIIP) of the United States, although at a substantial negative 19 percent of GDP, is still smaller than the negative NIIP of several other industrial economies. As a fraction of net household wealth, which totaled almost $56 trillion in 2006, the negative NIIP is even smaller--less than 5 percent.
Ultimately, the necessary reduction in the trade and current account deficits will entail shifting resources out of sectors producing nontraded goods and services to those producing tradables. The greater the needed adjustment, the more potentially disruptive and costly these shifts may be. Similarly, external adjustment for China and other surplus countries will involve shifting resources out of the export sector and into industries geared toward meeting domestic consumption needs; that necessary shift, too, will likely be less disruptive if it occurs earlier and thus less rapidly and on a smaller scale.
...in the longer term, the developing world should be the recipient, not the provider, of financial capital. Because developing countries tend to have high ratios of labor to capital and to be away from the technological frontier, the potential returns to investment in those countries are high. Thus, capital flows toward those countries should benefit both them and the countries providing the capital.