The U.S. Current Account Deficit, Spanish Version Harvard Case Solution & Analysis

The U.S. Current Account Deficit, Spanish Version Case Solution

Investors and policymakers throughout the world were faced with the threat of debilitating economic impacts arising from the large U.S. current account deficit. The implications of the shortfall were debated with intensity. At one extreme, it was claimed that big deficits would finally resolve themselves smoothly, even if they remained a lot more years. Alan Greenspan, the renowned economist, was among those anticipating a "benign solution to the U.S. current account imbalance." Other analysts, such as economists at the World Bank, considered the big shortages raised the threat of a sharp and disorderly fall of that needed macroeconomic adjustment and the dollar could not be painless, for the remainder of the world in addition to for the United States.

The Financial Times pondered over how foreigners would show such generosity in form of these 'presents' to the US and for what incentive?" In this environment, Berkshire Hathaway, run by legendary investor Warren Buffett, postulated that current account imbalances would lead to "some chaotic marketplaces in which currency allowances play a part" and declared to shareholders a plan to increase investment in overseas businesses to protect against this hazard. The short terms as well as the long term consequences of the current account deficit that would ultimately afford were yet to be unearthed.

PUBLICATION DATE: July 06, 2005 PRODUCT #: 706S24-PDF-SPA

This is just an excerpt. This case is aboutĀ GLOBAL BUSINESS

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