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Learning from Crises

PRINCETON – Crises, especially very severe ones, are often learning opportunities. Unfortunately, so far the world seems to have learned very little from the recent financial crisis. In fact, the situation today is just as dangerous as it was in 2007, with the United States now worried by its anemic economic recovery, Europe paralyzed by fears for the survival of its currency union, and emerging markets wrestling with asset-price bubbles.

Learning from crises is partly an exercise in analyzing what went wrong. But it is also about finding solutions. Collectively, we have done well on the former, and very poorly on the latter.