Surging debt levels seem unsustainable

IT is hard not to look at accelerating international, domestic, and personal debt and not feel a frisson of anxiety. 

The here-we-go-again alarm bells start to ring. The catastrophic impact of out-of-control debt, and the realisation that debt unwisely provided following light-touch assessments by irresponsible banks might never be repaid, has, time and time again, been the genesis of life-changing recession. Despite those crushing lessons, despite the confusion between appetite and need, or our it’s-different-this-time fantasy, we remain players trapped in the boom-and-bust cycle.

A wonderfully titled book of 1841, Extraordinary Popular Delusions and the Madness of Crowds, describes the 1637 tulip bubble, in Holland, when a tulip bulb sold for more than 10 times the annual income of a craftworker. Every economic implosion from then to our Anglo-Irish-led catastrophe of a decade ago has followed an all-too-predictable pattern.