The scope of the present global financial crisis is comparable to that of the 1930s. Public policies responding to each have been very different, however. The large macroeconomic response of the past three years has averted a new Great Depression, but regulation of the financial sector has been much softer than in the 1930s. This is partly due to financial globalization that extends beyond the capacities of national regulators. Macroeconomic antidepression measures have created new realities: the rise of indebted states. The sovereign crisis imposes market discipline on states while, conversely, states are too weak to impose regulatory discipline on markets. New modes of supranational regulation and a new ethics of the public interest are necessary for a new era of balanced prosperity.

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