Martin Wolf on debt levels

International Economy, The, Wntr, 2009 by Matthew Rees

"Comparisons between today and the deep recessions of the early 1980s are utterly misguided. In 1981, U.S. private debt was 123 percent of gross domestic product; by the third quarter of 2008, it was 290 percent. In 1981, household debt was 48 percent of GDP; in 2007, it was 100 percent. In 1980, the Federal Reserve's intervention rate reached 19-20 percent. Today, it is nearly zero."

"In the United States, the state of the financial sector may well be far more important than it was in Japan. The big U.S. debt accumulations were not by non-financial corporations but by households and the financial sector. The gross debt of the financial sector rose from 22 percent of GDP in 1981 to 117 percent in the third quarter of 2008, while the debt of non-financial corporations rose only from 53 percent to 76 percent of GDP. Thus, the desire of financial institutions to shrink balance sheets may be an even bigger cause of recession in the United States."

--Financial Times, February 18

Matthew Rees is the founder of Geonomica, a speechwriting and consulting firm.