"Another Year Older & Deeper in Debt..."

When I started blogging one of the seemingly best pieces of advice I read was to concentrate on what you know and don't get caught up in endlessly commenting on others' views. It still sounds sensible to me in the abstract - but given that very few of us, and certainly not me, fully understand the nature of the economic crisis it's been quite hard to adhere to.

Sometimes the function of a small time blog like this can be to merely repeat and spread around striking bits of info found elsewhere. So here (via) is a sobering graphic showing the current level of debt in the US financial system compared to the years of the Great Depression. Ann Pettifor gives a no-holds-barred Left Keynesian view of the implications of this graphic, and acidly comments:

"The implications are clear. It took years - from 1929 until the 1940s - and a World War, before the US cleansed itself of the 1930s debt sludge. Japan is still trying to purge itself of debts built up in the 1980s. 18 years after the Japanese ‘debtonation’ of 1990, the economy is still the weakest of all the OECD countries. Eighteen years after the property bubble burst, Japanese house prices are still falling!

Will it take 12-18 years for the US economy to recover...? On this reckoning: more than likely."

The original piece from which the graphic is drawn is by Dr. Krassimir Petrov. His is a more soberly written text - but one which seem to unequivocally point towards us actually being at the start of the second Depression.