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It's MORNING EDITION from NPR News. I'm Steve Inskeep in Houston.

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And I'm Renee Montagne at NPR West in California. This week, we've been looking back on the financial crisis of the past year. And one question hangs over all the others: What are the chances the world will go through this again? NPR's Tom Gjelten has been speaking with international economists about what steps need to be taken to avoid an even more serious crisis in the future. The consensus? There's still a rough road ahead.

TOM GJELTEN: Remember, this was a global financial crisis. It arose because of problems in the international economy, not just in one country. Economists generally agree the whole global financial system had become unstable and vulnerable to a meltdown.

Basically, the world economy was out of balance. Countries with big trade surpluses, like China and Germany, had too much money to spare. They loaned it to countries with big deficits. Overall, lots of reckless lending and borrowing. Finance writer Satyajit Das says it was a giant Ponzi scheme.

Mr. SATYAJIT DAS (Finance Expert): And everybody's walking around enjoying the prosperity. But that is inherently an unstable system.

GJELTEN: If we don't want it to crash again, the global economy has to be rebuilt on a more balanced basis, with more discipline by both lenders and borrowers. Growth can't be based so much on debt.

But here's the problem: To avoid a worldwide depression, the United States and other countries in the short run did exactly the opposite of what they needed to do for the long run. Reckless spending got us in trouble, so what did governments do to get us out? They increased their spending, even as we consumers were cutting back on ours.

Mr. DAS: What they're doing is racking up a heck of a lot of money on their credit card rather than on yours and mine.

GJELTEN: Around the world it's the same story.

Professor ESWAR PRASAD (Cornell University): Reaction has been to deal with the short term first and worry about the longer term later.

GJELTEN: Eswar Prasad of Cornell University says the big players — the U.S., China, Japan, the Europeans — all felt they had no choice but to take dramatic short-term steps to revive the global economy. But that left the long-term needs.

Prof. PRASAD: In the process of climbing out of the hole that we dug ourselves into, we have put off some of the pain for the future. I think the reality is that a lot more adjustment will have to come.

GJELTEN: In the United States, we borrow from China and other countries to finance our excess spending. But the more dollars we borrow, the more we drive up interest rates. The dollar then gets overvalued. Foreign goods get cheaper. U.S. goods get more expensive. We import more, export less and the trade deficit goes up.

If we paid more of our own way, we wouldn't need to borrow so much. It would be easier to trim our trade deficit. But at the moment, we're headed in the opposite direction, says Fred Bergsten, director of the Peterson Institute for International Economics.

Mr. FRED BERGSTEN (Peterson Institute for International Economics): We've done projections here at our institute that show that the trade deficit is going to get much, much larger again and go back, in fact, to unprecedented levels — unless we bring the budget deficit under control.

GJELTEN: Economists say the U.S. needs to sell more goods abroad and import less. China and Germany would be exporting less, importing more. But all this can happen only if the dollar goes down in value. And this adjustment would be painful for all sides. Consider the Chinese and German workers who produce goods for export to the U.S.

Eswar Prasad…

Prof. PRASAD: If you did have a fall in the value of the U.S. dollar, the rest of the world actually would have to take on a very significant burden of adjustment.

GJELTEN: Add it all up: Reduced government spending in the U.S. would mean budget cutbacks and slower growth. Restructuring the economies in China, Germany and other exporting countries could mean higher unemployment in export industries. Satyajit Das, a former debt trader, wonders whether governments will tell their people the truth, that to avoid another global crisis, they'll have to take bitter medicine.

Mr. DAS: The problem is, there is no government in the world which wants to admit that. Because to go to your electorate promising them austerity and hardship is really not a vote-winning strategy.

GJELTEN: Fred Bergsten of the Peterson Institute describes himself as an optimist, but he says the United States and other governments have not yet faced what they'll need to do in the next couple of years.

Mr. BERGSTEN: This is a very narrow tightrope and maneuvering it just right is going to be much more difficult than the policy response to the original crisis itself.

GJELTEN: A sobering thought just a year after the crisis broke.

Tom Gjelten, NPR News, Washington.

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