Economist Ed Yardeni is the strategist for Oak Associates Ltd., an investment management and mutual fund company. The comment below is an excerpt from a note to clients. January 20, 2006 "Last year, the Chinese personal saving rate was 40%, according to recently released government figures. The Chinese saved $1.74 trillion in 2005, up 11% from 2004. Americans saved nothing, yet our net worth rose $5.0 trillion to a record $51.1 trillion over the four quarters through Q3 2005.America is one of the few countries in the world where you can get rich without saving a dime. Americans have lots more opportunities for capital gains (both realized and unrealized) on their assets than the Chinese. That's because we have more assets and their value tends to increase along with the income they generate (stocks, rental properties, and privately held businesses). Some of our assets, particularly our homes, tend to go up in value along with the income we earn. Many Americans have enjoyed huge capital gains on their homes, and some have extracted these gains -- which are tax free up to $500,000 -- and put them in financial assets. Over the last four quarters through Q3 2005, homeowners' equity rose $1.4 trillion and Americans extracted more than $500 billion in home equity. This may be one of the main reasons why the saving rate has dropped in recent years. Is there something wrong with this picture? If I save 100% of my capital gain in real estate and 0% of my earned income, am I living beyond my means? Obviously not. However, homebuyers have been driving up home prices, taking out larger and larger mortgages, which is the major source of the capital gains realized by home sellers. Let's say that the Chinese, with their extraordinary saving rate, financed all of these mortgages by purchasing US mortgage-backed bonds. Of course, this could all end badly with a global recession if US home prices drop, if US consumers increase their saving rate, and if the Chinese stop buying our securities. This has been the pessimists' story for at least the past two years. I think they will be wrong again in 2006. But, then there is always 2007, which is when George Soros expects a recession. I told the folks at dinner last night that I see the next recession starting September 15, 2008 -- a few weeks after the Olympics in China."