Does the debt overhang matter?

On the one hand, economies are recovering, unemployment is falling, housing prices are on the up, and market interest rates have moved materially off their lows.

On the other hand, consumer and government debt remain at historically high levels, while the bast rate of interest remains at a multi-year low, thereby rendering any recovery very fragile. No wonder one-handed economists are in demand.  The debate is polarised, but for good reason.  Firstly, after any recession, until many of the major economic indicators have normalised, a key doubt surrounds the sustainability of the recovery, thereby fuelling ambiguity. It has been particularly protracted this time, due to the slow recovery profile, which is consistent with debt-driven recessions ...