The central theme here being that the "excess savings" view of the crisis is fundamentally incomplete. The ES view states that the financial crisis is all Asia's fault because they keep their currencies under-valued, build vast reserves as a consequence and recycle them in our economy, depressing long term rates, inflating bubbles. Bad asians.
The narrative seems rather trivial and therefore true. It seems evident that the more savings there are the more investment there is, but the paper claims, rightfully in my opinion, that it is irrelevant because the total financing is detached from savings anyway. This is a theme that has been near and dear to my heart: financing was NOT regulated in fine. An example I liked was that in fact most of the financing for the US came from europe which runs a neutral balance. So ES is just part of the story, not the most important one and that 'elastic' financing (Aka too much credit) is the real culprit. Fair enough.
I did like the conclusion though:
Analytically, this paper is a plea for a more systematic inclusion of monetary and financial factors in current macroeconomic paradigms. The distinguishing characteristic of our economies is that they are monetary economies, in which credit creation plays a fundamental role. The financial system can endogenously generate financing means, regardless of the underlying real resources backing them. In other words, the system is highly elastic. And this elasticity can also result in the volume of financing expanding in ways that are disconnected from the underlying productive capacity of the economy. In macroeconomic models, the role of money and credit should be essential, not ancillary. This calls for a revival of an old and highly respected tradition in macroeconomics – one which, sadly, has been largely neglected in the current prevailing paradigm.