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2. The US has significant risk (30% or greater) of experiencing pronounced Japan- like symptoms over the next 5-10 years: especially much lower medium term growth than before the crisis, soaring budget deficits, more frequent than usual recessions. Giannetti, Mariassunta and Andrei Simonov (2009). “On the real effects of bank bailouts: Micro-Evidence from Japan,” EFA 2009 Bergen Meetings, June. Mariassunta Giannetti_ Andrei Simonov, The real effects of bank bailouts: Evidence from Japan, Voxeu http://www.voxeu.org/index.php?q=node/4011 Ketichiro Kobayashi, The G20's Blind Spot: President Obama must squarely face the bad asset problem, March 26, 2009 Hoshi, Takeo and Anil K. Kashyap, 2008, “Will the U.S. Bank Recapitalization Succeed? Lessons from Japan”, NBER Working Paper 14401. Adam Posen, “Seven Reasons the US Today is Not Like Japan 15 Years Ago,” Institute for International Economics, September, 2008 http://www.tie.com/realtime/?p=20 Maurice Obstfeld, “Time of Troubles: The Yen and Japan’s Economy, 1985-2008” NBER Working paper 14816, March 2009 3. The G-20 is right to focus on containing global (current account) imbalances to well below their pre-crisis levels (say to roughly half or less within four years). US must achieve higher national savings rate, if necessary substantially strengthening financial regulation and oversight. China must allow its exchange rate to significantly appreciate over time, and redirect production towards domestic demand instead of exports. Obsteld, Maurice and Kenneth Rogoff, “Global Imbalances and the Financial Crisis: Products of Common Causes,” Harvard University, October 13, 2009. Cooper, Richard, “Global Imbalances: Globalization, Demography, and Sustainability,” Journal of Economic Perspectives, 2008, Issue 3, 93-112. Michael P. Dooley, David Folkerts-Landau, Peter Garber, “The Revived Bretton Woods System: The Effects of Periphery Intervention and Reserve Management on Interest Rates & Exchange Rates in Center Countries,” NBER Working Paper 10332, March 2004. Michael P. Dooley, David Folkerts-Landau, Peter Garber, “An Essay on the Revived Bretton Woods System,” NBER Working Paper 9971, September 2003. HOUSE_OVERSIGHT_019404