Deleveraging Cycles Can Last A Very Long Time

Was the financial crisis a watershed event that marked a structural shift in attitudes toward debt?


History suggests that major credit busts trigger lasting shifts in credit behavior. The chart above shows that U.S. consumers have become much more focused on saving since the financial crisis.

The Great Depression was a more traumatic event than the recent downturn. Nevertheless, it is interesting to note that nominal growth in U.S. private debt turned negative in 1931 and did not move sustainably into positive territory until 1947. In real terms, the level of private debt did not reach a new peak until the mid-1950s. Anecdotal evidence indicates that many of those who experienced the Depression retained a strong aversion to debt for the rest of their lives.

More recently, Japan’s experience also carries a salutatory message: the country’s Debt Supercycle ended more than two decades ago and has yet to turn around.

The situation in Europe also is bleak with respect to credit growth. In the strongest economy – Germany – there is not a consumer borrowing culture, and that does not seem likely to change anytime soon. Meanwhile, business borrowing also continues to grow at a very subdued pace. In those countries that did embrace credit, a powerful deleveraging phase remains underway and still has a long way to go.

For more on credit trends in developed and emerging economies, please see the latest Inside BCA, The End Of The Debt Supercycle: An Update.

Lawrence H. Summers and Joaquim Levy to Speak at BCA’s Investment Conference in New York City

Lawrence H. Summers and Joaquim Levy have been confirmed as additional keynote speakers at BCA’s 2016 Investment Conference on September 26-27 in New York at the Grand Hyatt hotel.


  • Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, will deliver a keynote speech on “Secular Stagnation and Other Issues.” Read more…
  • Joaquim Levy, Managing Director and World Bank Group Chief Financial Officer (and former Minister of Finance for Brazil), will focus his keynote presentation on “When to Buy Emerging Markets.” Read more…

Several highly-respected experts will join with BCA strategists to discuss this year’s theme, “Navigating a 4-D World of Debt, Divergences, Deflation & Disruption,” offering valuable insights on key issues affecting the economic and market outlook.

Confirmed guest speakers include:

  • Paul Volcker, Former Federal Reserve Chairman (1979-1987)
  • Kevin Warsh, Stanford University and former Fed Governor
  • Albert Edwards, Chief Global Strategist at Société Générale
  • Martin Fridson, CIO, Lehmann, Livian, Fridson Advisors LLC

Attendees are also invited to attend a special conference dinner featuring General Michael Hayden, former head of the CIA and NSA, who will share his perspectives on “Terrorism and Cybersecurity Risks.”

Here are just some of the topics that we’ll be covering (you could refer to our latest agenda here):

  • Key macro themes that will drive financial markets
  • BCA’s top investment ideas for the coming year
  • Emerging Markets and China
  • The challenging outlook for the financial sector
  • Secular stagnation and other issues
  • Fintech and the disruption of the financial sector

Exclusive two-day investment industry event…

Over the last three decades, BCA’s New York Investment Conference has established itself as a must attend event.  For information on the venue and where to stay, click here.

Reserve your spot today…

Join us in New York as BCA Strategists and an outstanding group of speakers explore key issues that will drive market performance in this challenging environment.