When European leaders finally acted, they had to provide a much larger rescue package than would have been necessary had they moved earlier.

The Greek crisis festered and spread to other deficit countries.

Then panic spread to credit markets, money markets, and currency markets, highlighting the vulnerabilities of many developing countries financial systems and corporate sectors, which had experienced credit booms and had borrowed short and in foreign currencies.

Countries with large current account deficits and or large fiscal deficits and with large short term foreign currency liabilities have been the most fragile.

OPEC countries grew rich, while the rest of the developing world struggled with unsustainable trade deficits and indebtedness.

BERKELEY The United States is beset by four deficits a fiscal deficit, a jobs deficit, a deficit in public investment, and an opportunity deficit.

But John Maynard Keynes pointed out that surpluses lead to weak global aggregate demand countries running surpluses exert a negative externality on their trading partners. Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity he went so far as to recommend a tax on surplus countries.

Indeed, Keynes believed that it was surplus countries, far more than deficit countries, that posed a threat to global prosperity he went so far as to recommend a tax on surplus countries.

For example, Vietnam transformed itself from a food deficit country to the second largest rice exporter in the world by developing its smallholder farming sector.

The counterargument hinges on the difference between the current account deficit and the trade deficit.

The crisis spread from Greece to other deficit countries, eventually calling into question the euro s very survival.

The really important target for any country starting an adjustment program with a double digit current account deficit must be export growth.

Countries with a stronger fiscal position (that is, smaller structural deficits) should be encouraged to adopt more expansionary policies in order to contribute to lifting overall demand.

The Real Risks of Deficits

After all, payment imbalances always have two sides, and the burden of adjustment should not be borne only by deficit countries.

It may seem appalling to expect such a highly indebted country to continue to run deficits but the world is willing to finance the US at negative real interest rates.

The US is starting on its privatization venture with a fiscal deficit of 4 of GDP.

One concerns who borrowed the money.

Who Will Run the World s Deficits?

But that misses the entire point surplus countries must contribute no less than deficit countries to global and regional rebalancing, because the world economy cannot export to outer space.

India s economy is continuing to grow, but faces rising inflation, fiscal and current account deficits, a slowdown in agricultural growth, and infrastructure bottlenecks.

Twenty percent of global GDP already is produced in water scarce areas.

NEW YORK In the aftermath of the Great Recession, countries have been left with unprecedented peacetime deficits and increasing anxieties about their growing national debts.

Output growth in the US remains anemic, and the economy continues to face three significant deficits a jobs deficit, an investment deficit, and a long run fiscal deficit, none of which is likely to be addressed in an election year.

Countries whose policies and economies are out of balance should change their policies, thereby restoring balance deficit countries should reduce the rate of growth of domestic spending below that of domestic production.

The US has won its battle against its enemy 2, the budget deficits that ballooned under President Reagan.

Between 2004 and 2006, PSG was the only French club with a large deficit, registering losses of 30m.

But this adjustment of relative prices via currency movements is stalled, because surplus countries are resisting exchange rate appreciation in favor of imposing recessionary deflation on deficit countries.

uncertainties connected to America's massive trade deficit, which has reached all time records.

Meanwhile, US states have been faced with massive revenue shortfalls, exceeding 200 billion.

Borrowing by the EIB has no implications in terms of European fiscal rules.

Germany experienced a consumption and construction boom after unification, with full employment and a current account deficit.

People in Japan have been unplugging their lives as electricity saving measures have been implemented to cope with power shortages.

In a country with large fiscal deficits, the central bank may have to keep interest rates high to control inflation.

Aquaculture, the farming of fish and other aquatic organisms, could in principle ameliorate the coming shortfall.

The difference between the overall deficit and the primary deficit implies that the interest on the Greek national debt this year will be 4.1 of GDP.

This is forcing deficit countries into real exchange rate adjustments via deflation and thus a rising burden of public and private debt that may lead to disorderly defaults.

Moreover, the eurozone s strategy for dealing with the crisis implicitly relies on a rising surplus member states with current account deficits are under pressure to close them, but creditor countries face no pressure to reduce their surpluses.

Rather, deficit countries need to export their way back to balance, while imports should increase in surplus countries.

Some economists admittedly a diminishing number deny that there can ever be an output gap. The economy, they argue, is always at full employment.

Some economists admittedly a diminishing number deny that there can ever be an output gap.

Countries with special needs

Countries that had been growing rapidly in the run up to the great crash of 2008 typically had trade surpluses (or very small deficits).

From a surplus of 1.4 of GDP in 2000, the Bush administration has delivered a deficit of 4.6 of GDP this year.

China s new leadership is further removed from Maoist era reflexive opposition to nuclear negotiations Russian leaders confidence in their economic and military resurgence is waning and both countries are increasingly frustrated by the lack of progress in nuclear talks with North Korea and Iran. Meanwhile, faced with a large federal budget deficit, many American voters would welcome reduced spending on nuclear weapons.