As I mentioned earlier, the expansion of financial investor participation in commodity markets can bring about benefits by reducing hedging costs for producers and consumers. At the same time, trend following strategies, especially when they are combined with algorithmic and high-frequency trading techniques, may move commodity prices away from values consistent with “fundamentals” over short time horizons.
Current account surpluses and deficits reflect net foreign lending and borrowing, respectively; and depending on the circumstances, both can be rational as well as non-detrimental for a given country. In Germany, for example, the period following reunification saw substantial domestic demand and substantial capital requirements that pushed the current account into the red for an extended period of time.