Simon Johnson: We're Setting Ourselves Up For A Big Catastrophe

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Simon Johnson, the MIT professor and economist who's long been a strident critic of "too big to fail" institutions, appeared on CNBC this morning and predicted that the next phase of the financial crisis could be precipitated by banks exploiting emerging markets like China.

"We now have a financial system that is completely based on moral hazard," Johnson said. "Crazy things happen when you have a financial system like that."

Johnson rebutted the recent sunny predictions of new Bank Of America CEO Brian Moniyhan, who said the bank's economists are predicting U.S. GDP will grow at a 3 percent pace next year.

Here's Johnson:

"The conventional wisdom is you can't have back-to-back major financial crises. I think we're going to push that, we're going to have a look and see whether that's true. And the next 12 months could really be exciting. People could be very positive, but we are setting ourselves up for an enormous catastrophe."

Simon Johnson: We're Setting Ourselves Up For A Big Catastrophe

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