Fault lines

current account
CA = NX + NFP + one-sided transfers of money across national boundaries
page 240

As a measure of a country's overall health, the current account can be misleading. (JAPAN)
Money flows from countries that run current account surpluses to those that run current account deficits.

National savings - National investment = CA

P243-245

Forces that played a big role in the rising current account deficit:
(1) recession and tax cut in Bush administration leads to higher fiscal deficits
(2) issue too much debts, which are bought by Chinese
(3) FED: plenty of easy money and little supervision of financial market

Much of the investment was financed with savings from other countries, but the Fed helped create the unsustainable boom that attracted these savings in the first place. 

page 253 Problems within China
page 260 

Repairing gaping holes in the balance sheets of banks, corporations, and households is a time-consuming process, and this process of "deleveraging" helps keep the economy in the doldrums for some time.

The biggest obstacles to recovery in the US may well be the dire condition of individual states' finance. IN theory, the federal government could step into the breach and bail out the states. But this theory ignores the fact that the debt load of the US is already approaching dangerous levels.