Prof posted :http://www.youtube.com/watch?v=7PZ4oW40FLQ&feature=player_embedded Global imbalance Faten comment : In a circumstance where some countries have large current account deficits because of...

Prof posted
:http://www.youtube.com/watch?v=7PZ4oW40FLQ&feature=player_embedded

Prof posted :http://www.youtube.com/watch?v=7PZ4oW40FLQ&feature=player_embedded Global imbalance Faten comment : In a circumstance where some countries have large current account deficits because of large foreign debt while others have large current account surpluses and the countries are net foreign lenders, then there will not be stability in the economy. Destabilizing of the economy may result from a country closing out on other foreign currencies in that particular country. In the case where the stability of an economy is affected by current account deficits, it is advised that the economy of that country should encourage trade so that money can be generated and the excessive debt reduced. Prof comment :However it is not a problem for a country to have a large current account deficit (surplus) as long as there exists countries willing to lend (borrow). The act of borrowing or lending is not the problem; it is a normal economic activity without which funds would not be able to go where they are the most needed. Thus what may cause that "imbalance" to become a problem?