Deleveraging, What Deleveraging? The 16th Geneva Report on the World Economy

The report offers not only the context of debt dynamics over the last decade, but also a detailed analysis of the changing nature of debt over time and across the world, the occurrence of leverage cycles, and the capacity for debt and leverage – and the policies to deploy in managing both debt and the legacies of the past crises. [...] 4 Deleveraging, What Deleveraging? Still, the legacy of the past crisis remains severe in developed markets, especially in the peripheral countries of the Eurozone, which remain vulnerable due to the complexity of their crisis and the partial inadequacies of the mix and sequence of the policies adopted. [...] In the non-financial corporate sector for developed markets, the leverage ratio has remained more or less flat (Figure 2.3).9 Similarly, the US and the UK account for the bulk of the gradual deleveraging process in the financial sector.10 In the US, the ratio of debt to GDP in the financial sector has in fact fallen to its lowest level since the beginning of the new millennium (again, we will retu. [...] Prior technological innovations include the invention of the diving bell, the canal building boom, the great expansion of railroads, the routinised refrigeration of beef that opened the Pampas of Argentina, the advent of radio, the widespread adoption of television, and that improvements in fibre optics that made the internet scalable. [...] 4 Case studies 4.1 The United States 4.1.1 The re-leveraging of the US economy The role of debt accumulation in the US in the run-up to the financial crisis of 2008 is best seen in a longer perspective.