Sunday, December 05, 2010

Macro Perspective: Life and Debt in The Great Stagnation (BubbleGeneration)

There's much ado about debt: lots of hype (and spin) about debt crises. So let's do a quick examination of the actual numbers, dynamic, and trends.

The first thing that's apparent from the chart is who's the best off, from the immediate perspective of long-run debt. Canada's been actively deleveraging for a decade--maintaining the often breathlessly discussed fiscal and financial discipline. Canadian households are leveraging up, but not to a degree that might cause alarm. Superficially, the picture of a relatively healthy economy. Next up is Germany, whose much vaunted fiscal and financial rectitude is on clear display. Debt flatlines across households, governments, and the private sector. Yes, you can argue that Germany's rectitude is the zero-sum benefit of export-led growth that effectively beggars it's neighbors, pushing them into deficit--at least to some extent.

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