these forecasts? two important determinants, among others, that have been adversely affecting private consumption and investment are the perceived unusually high uncertainty surrounding the european and global economic outlook and the exceptionally low confidence in the financial system. reducing this uncertainty and restoring confidence will be crucial for increasing the effectiveness of the policy measures being implemented and the pace of the recovery. the estimated total potential impact of the ongoing crisis on the value of assets held by global and european financial intermediaries is very large and has recently been revised upwards. according to the imf, the total potential writedowns on assets originated in the united states, europe and japan could reach usd 4. 1 trillion over the period 2007 – 2010, of which usd 2. 8 trillion would be borne by banks. the total expected writedowns on assets – both loans and securities – held by european banks are estimated at usd 737 billion. it is useful to distinguish between the actual losses incurred so far, and potential future losses. in europe, the reported writedowns ( on securities and loans ) of banks so far 3 amount to almost usd 358 billion ( of which euro area banks account for less than usd 173 billion ). at the same time, a total of usd 382 billion of fresh capital has been raised by european banks ( of which usd 190 billion was raised by euro area banks ). therefore, the newly injected capital into european and euro area banks exceeded the reported writedowns. looking forward, the potential further losses of european banks until the end of 2010 are estimated at usd 750 billion. 4 it is important, however, to keep in mind that estimates of the potential future writedowns on assets are based on many underlying assumptions concerning the future path of economic activity, asset market developments and the calculation of impairment charges on loans. these estimates are therefore subject to a substantial margin of error. there is, however, one important point concerning the estimated potential future writedowns of european banks. they mainly reflect expected losses on loans and to a lesser extent further writedowns on securities. this underscores the significance of see international monetary fund, word economic outlook, april 2009, released on 16 april 2009. see european commission, economic forecast spring 2009, released on 4 may 2009. data included up until 19 april 2009. see international monetary fund, global financial stability report, released on 21 april 2009. pursuing policies that can prevent, or at least limit, the negative feedback loop between the banking system and the real

growth because “ the low - hanging fruit is picked, ” see robert j. gordon ( 2012 ), “ is u. s. economic growth over? faltering innovation confronts the six headwinds, ” nber bis central bankers ’ speeches believe that, as a nation, we should be pursuing policies to support longer - run growth in productivity. policies to strengthen education, to encourage entrepreneurship and innovation, and to promote capital investment, both public and private, can all be of great benefit. it also is possible that a portion of the relatively weak productivity growth we have seen recently may be the result of the recession itself. 8 firms slashed their capital expenditures during the recession, and as i noted earlier, the increases in investment during the recovery have been modest. in particular, investment in research and development has been relatively weak. moreover, a lack of financing may have impaired the ability of people to start new businesses and implement new ideas and technologies. as the economy strengthens further, many of these processes could work in reverse, boosting our productivity prospects. to the extent this is so, federal reserve actions to strengthen the recovery may not only help bring our economy back to its productive potential, but it may also support the growth of productivity and living standards over the longer run. working paper series 18315 ( cambridge, mass. : national bureau of economic research, august ) ; and tyler cowen ( 2011 ), the great stagnation : how america ate all the low - hanging fruit of modern history, got sick, and will ( eventually ) feel better ( new york : dutton ). for a more optimistic perspective, see joel mokyr ( 2014 ), “ secular stagnation? not in your life, ” in coen teulings and richard baldwin, eds., secular stagnation : facts, causes and cures ( london : cepr press ), pp. 83 – 89 ; and erik brynjolfsson and andrew mcafee ( 2014 ), the second machine age : work, progress, and prosperity in a time of brilliant technologies ( new york : w. w. norton & company ). the greatest return to adopting information technology appears five to seven years after investment, according to erik brynjolfsson and lorin m. hitt ( 2003 ), “ computing productivity : firm - level evidence, ” review of economics and statistics, vol. 85 ( november ), pp. 793 – 808. see dave reifschne