2. The Great Leveraging
The aggregate picture conceals much diversity
Debt and debt service relative to debt servicing capacity
Non-financial assets are significant
Household gross debt and housing
3. What Caused the Great
Debt, risky debt and equity: Why does debt exist in the first place?
The drivers of the great leveraging
4. Why Does Debt Matter in General?
Can’t we do what we did before?
5. Why Debt Matters Today
Debt causes systemic crises
6. Which Debt Matters Most?
Debt can migrate from one sector to another
Not all debt is created equal: public vs. private debt
Not all debt is created equal: private non-financial sector debt
Not all debt is created equal: bank and financial sector debt
Heterogeneity within sectors
The external sector – debt and trade
Gross and net debt/net worth: Liquidity and aggregation matter
Debt and debt-servicing capacity
7. When is Deleveraging Most
Is default always costly?
Socially efficient defaults
Bad luck and bad faith default
Why not inflate debt away when it is excessive?
8. How Much Deleveraging has
9. How Much More Deleveraging is
What will the ‘new normal’ for private and sovereign debt look like?
Households are likely to require plenty of additional deleveraging
10. When Will Public Deleveraging
Come to the US and Japan?
The great convergence between EM and AE sovereign debt
13. Conclusion: What Lies Ahead?
Nonfinancial sector debt