Morici: Trade Deficit a “Fundamental Structural Problem” for the Economy

http://www.freep.com/article/20090303/BUSINESS07/903030328/1002/BUSINESS/Depression+may+be+under+way

The linked article reports on comments by Dr. Peter Morici, economist and business professor at the U. of Maryland, in which he discusses the possibility that we are entering a depression. 

“We’re probably in a depression now. But it’s not going to be acknowledged until years go by. Because you have to see it behind you,” said Peter Morici, a business professor at the University of Maryland.

The article then goes on to list those factors that economists have traditionally used to define a depression.  But it’s this comment by Morici that really caught my eye:

Morici said a depression is a recession that “does not self-correct” because of fundamental structural problems in the economy, such as broken banks or a huge trade deficit.

This may be the boldest criticism of our trade deficit that I’ve seen yet from Dr. Morici , someone who’s gotten a lot of “face time” in the media since the start of this crisis and whose credibility seems to be on the rise.  By identifying the trade deficit as a fundamental problem making this recession/depression unable to self-correct, he’s calling for government action to eliminate it.   Let’s hope the Obama administration is listening.

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