Peter Morici is an economist and professor at the Robert H. Smith School of Business at the University of Maryland. He is a recognized expert on international economics, industrial policy and macroeconomics. Prior to joining the university, he served as director of the Office of Economics at the US International Trade Commission during the Clinton Administration.

During the recent expansion, the trade deficit swelled to more than $700 billion or five percent of GDP. Americans borrowed from abroad, mostly to pay for oil and Chinese consumer goods. They posted as collateral homes at values inflated by slap-dash appraisals and slick Wall Street financial engineering.

Ultimately, homeowners defaulted on mortgages, home prices tanked, banks failed, retail sales collapsed, and layoffs soared.

President Bush and the Federal Reserve rescued the biggest banks with the TARP and nearly $2 trillion in easy loans. Sadly, the scions of Wall Street were not so generous with their debtors, jacking up credit card fees to squeeze new profits.

Enter President Obama, promising stimulus spending on infrastructure to create private sector jobs. Instead, only $100 billion of the $759 billion package is slated for brick and mortar, as the rest is shoring up bloated government agencies and funding temporary tax cuts that mostly pay down consumer debt.

Ten months into Obama’s era of new hope, new unemployment claims still exceed 500 thousand each week, job applicants outnumber positions 6 to 1, and unemployment stands at 10.2 percent.

In Congress, Speaker Pelosi is ramming through “cost cutting” health care reforms that will require $200 billion annually in additional insurance premiums and taxes and push health care spending above 20 percent of GDP. In France and Germany, that figure is only 12 percent, indicating a worsening competitive burden to US jobs creation.

Private businesses, recognizing policies bent on economic stagnation, continue slashing payrolls and inventories to accommodate poorer consumers and anemic growth going forward.

The 3.5 percent GDP advance posted in the third quarter was juiced by cash for clunkers and a slower inventory rundown - - in the arcane world of GDP accounting, those boosted growth by 1.9 percentage points.

Lacking exports to pay for oil and Chinese televisions, sustainable growth remains below the three percent necessary to pull down unemployment.

Simply, annual productivity and labor force growth are two and one percent, respectively. GDP growth must exceed the sum of those numbers, or businesses can meet new demand while unemployment hangs above 10 percent.

China will grow ten percent next year, and Asia will boom. Big US companies like Caterpillar and GE that manufacture and sell there will prosper.

Prospects for stronger Asian growth and even a modest US recovery are enough to power profits for American multinationals. Add the expected bonanza to drug and medical device makers from health care reform, and stock prices are up even as the unemployed languish in despair.

Meanwhile, Washington is driving the dollar down against foreign currencies by hawking $2 trillion in new Treasuries to pay for bank bailouts, reckless stimulus and other fiscal foolishness.

Foreign central banks and investors don’t hold greenbacks—they prefer Treasury securities which pay interest. All those Obama Bonds increase the supply of the dollar-denominated securities in international markets, while inflation worries drive investors away from those securities into gold, euro and yen.

Increase supply, sabotage demand, and the dollar tanks, whether measured in gold, euro, yen, or yak eggs on the plains of Tibet. Add talk of a global currency from disgusted foreign central bankers, and worries abound about a final dollar panic.

With consumers unable to borrow and spend like the good old days, US exports must surge and imports abate to create enough new customers for what Americans produce. Only that will power US growth robust enough to generate the taxes necessary to stem Washington’s borrowing, printing press promiscuity, and the dollar weakness.

Unfortunately, a cheap greenback against the euro and yen is not likely to boost exports enough, because Europe and Japan have only middling growth prospects too.

US imports will rise, because oil is priced in dollars and China continues to fix the yuan against the dollar at an arbitrarily low level to subsidize its exports. Those rising imports could sap demand for US goods and services enough to instigate the dreaded double dip recession in late 2010.

Blind to Chinese mercantilism, President Obama has no credible plan to boost exports or reduce imports. Democrats’ obsession with health care, global warming and social issues only raise business costs and exacerbate the resulting malaise.

US stocks may ride the Chinese miracle, but American workers will suffer lost hope, and the dollar may become cheaper than wallpaper in foreign markets before the follies end.

CNBC, Sat Oct 31, 2009: Discussing whether there is a recovery or the GDP report is bogus, with Joseph LaVorgna, Deutsche Bank and Peter Morici, University of Maryland: