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Crisis watch: still too big to fail

The Obama administration has failed to tackle the “too big to fail” problem. While the incentive to grow remains, disaster looms

By Simon Johnson   July 2010

Informed opinion is sharply divided on how the next 12 months will play out for the global economy. Those focused on emerging markets are emphasising accelerating growth, with some forecasts projecting a 5 per cent increase in world output. Others, concerned about problems in Europe and the US, are more pessimistic, with growth projections closer to 4 per cent—and some even see a possible “double dip” recession.

This is an interesting debate, but it misses the bigger picture. In response to the crisis of 2007-09, governments in most industrialised countries put in place some of the most generous bailouts ever…

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