a significant degree of enlightened self - interest will be required. i will begin with a quick review of the current situation, and compare it with where many of us thought, or hoped, we would be today. i will also show you where we might have been if timely and aggressive corrective action had not been taken. “ be thankful for what you have ” might be the appropriate epitaph for the great recession – it could have been worse. this is followed by a discussion of the economic game plan that was laid out by the g - 20 leaders at a meeting convened by president obama in late 2009. this g - 20 framework for strong, sustainable and balanced growth was designed to deliver what the name suggests. 4 u. s. gdp fell by roughly 4 per cent from peak - to trough, while real economic activity in europe and japan fell by 6 and 8 per cent, respectively. this assumes, of course, that the previous trend rate of growth was sustainable. remark by glenn stevens, governor of the reserve bank of australia, at a recent private meeting. for details of the g - 20 framework for strong, sustainable, and balanced growth. bis central bankers ’ speeches the third part of my presentation assesses what has transpired since 2009 – identifying those policy commitments that were fulfilled and those that were not, highlighting, in particular, the major failings. the fourth and final part of my presentation reviews where we need to go from here. that is the uplifting part of what i will say today. it ’ s not good, but it could have been worse the u. s. economy, as i noted a moment ago, has passed the peak that it reached just prior to the crisis, but it is well below where it would have been were it not for the collapse. unemployment remains near 8 per cent, compared with an earlier ( and perhaps unsustainable ) trough of 4. 4 per cent just before the crisis, and is well above consensus estimates of the structural or natural rate of unemployment. excess capacity is judged to be in the range of 3 to 4 per cent of potential output. chart 2 shows the state of the u. s. economy over the past five years ( the solid red line ), and where the bank of canada projects it will be going over the next two years ( the dashed red line ). the upper and lower bounds of the grey area represent the fastest and slowest recoveries of the u. s. economy following all

has gone global, are different than recoveries from “ normal ” recessions. some allowance has to be made for this. second, new shocks have hit the global economy since 2008. the earthquake in japan and the crisis in europe are the most obvious examples, although some would argue that the latter is simply an extension of the initial financial crisis. even allowing for these factors, however, there is a sense that we could have done better. what needs to be done? can we get back to where we want to be? in a word, yes. what is needed is very similar to what was first proposed and agreed in late 2009, but with some necessary modifications. the following list is not meant to be comprehensive but simply hits the highlights. first the united states must deal with its fiscal cliff. action is required to bring the budget into line. but something with a smoother profile over the next two to three years, coupled with a credible long - term track would be preferable to the aggressive tack now in play. second, europe must set itself right. certain things are required just to contain the crisis. these include activating the stabilization mechanism to help support sovereign debt re - financing and recapitalize banks, and the outright monetary transactions program, which will help eliminate the risk of euro redenomination and improve the monetary policy transmission mechanism in the euro area. bis central bankers ’ speeches of course, it will take several years to fully resolve the crisis in europe. key elements are further fiscal consolidation in many countries, repair of the broken banking systems, deep reform in labour and product markets, improved governance, and eventual completion of the banking, fiscal and political unions. third, surplus countries that are delaying necessary global adjustment by frustrating necessary exchange - rate changes should move more expeditiously toward market - determined rates. in addition, they should undertake the structural changes necessary to boost domestic demand, with particular emphasis on consumption. this would allow more of their citizens to realize the full rewards of their labours and improve general economic welfare. conclusion there is an old joke about a lost traveller who asks for directions and is told by a local, “ i wouldn ’ t try to get there from here. ” unfortunately, we have no choice about our point of departure. it would be easier if we were starting from a better place, but we aren ’ t. happily, the original road map established in 2009 remains broadly appropriate. 10 more may be required, since we have lost valuable time