[OPE] Macroeconomic Imbalances in the United States

This is the best analysis of the causes of the crisis that I've come
across so far:

    Macroeconomic Imbalances in the United States and Their Impact on
    the International Financial System
    by Julia S. Perelstein

    "This paper argues that the financial crisis of 2007–08 is
    symptomatic of macroeconomic imbalances in the U.S., because the
    imbalances are eventually resolved in financial markets, and passed
    on to the real economy. On the other hand the international
    financial system is dependent on U.S. trade deficit for feeding
    liquidity into financial and commodity markets."
    <http://www.levy.org/vdoc.aspx?docid=1112>

I have found very little analysis of the connection between the US
current account deficit and the financial crisis. What has been written
recently by, for instance The Economist, has focused mainly on the low
savings (over-consumption) in the US as the driving factor of the
deficit and the growth of debts.

Anwar Shaikh suggested in his talk with Doug Henwood that the central
factor was a rising US trade deficit due to the poor performance of its
exports. Gerard Dumenil and Dominque Levy also emphasized this in their
article in Le Monde Diplomatique; lack of productive investment in US
industry.

Perelstein's paper attempts to formulate a systematic theory of these
mechanisms.

//Dave Z

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Received on Fri Jan 30 16:26:29 2009