A situation that has stalled with no action being taken.
The expression refers to a disabled ship that is unable to proceed. Its use as an expression outside the confines of the naval/seagoing world appears to be relatively recent and originates from America. For example, the Boston Globe wrote in 1980 "For Arthur Lane, perennial president of the Boston Shipping Association, the Port of Boston is 'lying dead in the water'", and in 1982 then Treasury Secretary Donald Regan described the national economy as being 'dead in the water'.
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