Insight: No quick exit from West's economic malaise

Ending the Great Stagnation that is taxing Western policy makers may depend as much on the Chinese Communist Party as it does on the world's leading central banks. Six years after the global financial crisis erupted, there is any number of explanations why Europe cannot shake off a Japan-style balance-sheet recession and why the United States is experiencing sub-par growth and high unemployment. Firstly, there is an excess of global savings, which has lowered the natural real rate of interest that equalizes savings and investment. Even with interest rates near zero, monetary policy is like pushing on a piece of string.

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