Five years on, public, private, and external debt are at record levels in many countries.

Moreover, private and public sector debt levels tend to be much lower in the emerging economies.

In both cases, debt levels eventually became unsustainable.

Fiscal deficits must be cut to reduce debt levels.

Unsustainable private debt problems must be resolved by defaults, debt reductions, and conversion of debt into equity.

Rapid expansion of private debt raises other, larger concerns.

Emphasizing the important role that private sector creditors play in debt relief and debt sustainability,

But Ireland, with previously modest deficit and debt levels, also suddenly and unexpectedly faces the same kind of issue, owing to the government s need to take over private debt from the banking sector.

But Ireland, with previously modest deficit and debt levels, also suddenly and unexpectedly faces the same kind of issue, owing to the government s need to take over private debt from the banking sector.

The size of Italy's national debt has grown to record levels

While there is much talk about de leveraging as the crisis wanes, the reality is that private sector debt ratios have stabilized at very high levels.

Moreover, balkanization of economic activity, banking systems, and public debt markets continues, as foreign investors flee the eurozone periphery and seek safety in the core. Private and public debt levels are high and possibly unsustainable.

In part, the decline was due to increased holdings of foreign public debt relative to private debt.

Only then will America improve its competitiveness enough to allow the government to reduce both private and public debt to sustainable levels while maintaining a respectable growth rate.

What Europe and the IMF have essentially done is to convert a private debt problem into a sovereign debt problem.

Indeed, these private funds account for about two thirds of all new debt.

After all, private creditors hold only a minimal share of Greek debt nowadays.

Six months later, after substantial official funds had been used to pay private creditors, the outstanding private debt was substantially restructured.

While private debt as a share of GDP stabilized, public debt increased by 50 in the five years after the bust.

But the debate about austerity and the cost of high public debt levels misses a key point Public debt owed to foreigners is different from debt owed to residents.

It is an even less direct way to address the private, related debt overhang.

As a result, large and potentially unsustainable stocks of private and public debt remain.

In Europe, the market for Greek debt has frozen, and interest rate spreads between Irish and German euro denominated debt recently reached alarming levels.

First, different countries have different capacities to sustain public debt, depending on their initial deficit levels, existing debt burden, payment history, and policy credibility.

Together with debt relief, these policies have resulted in low levels of public debt, relatively sound financial systems, and most important  rising living standards.

And yet, despite what pundits claim about strong balance sheets, firms debt levels, relative to assets and net worth, also remain near record high levels.

Buenos Aires maintains low debt levels and its service requires less than 3 of the budget.

Forcing a debt for equity swap or debt forgiveness would be no greater a violation of private property rights than a massive bailout.

Ultimately, a significant restructuring of private and or public debt is likely to be needed in all of the debt distressed eurozone countries.

With credit markets impaired, the Fed could buy more government bonds or private sector debt.

Ongoing private and public debt deleveraging has kept global demand growth below that of supply.

There, too, governments widely guaranteed private sector debt, and then proceeded to default on it.

Public debt could be reduced without fear of recession, because private demand would be stronger.

Before Greece took any loans, it should have initiated debt restructuring and undergone a partial default on debt owed to its private sector creditors.

America, too, will manage to muddle through again leaving even higher levels of debt for the future.

Moreover, the IMF s share in crisis countries total external debt has reached unprecedented and systemically problematic levels.

Higher incomes would boost US savings, reducing households dependence on debt, even as they maintained consumption levels.

At that point, interest rates on sovereign debt would have to rise to sustain governments borrowing levels.

The stock imbalances include large and rising public and private debt as a share of GDP.

But when private creditors hold sovereign debt, organizing them creates a new challenge with each episode.

What if private debt represented a share so small that no haircut would restore sustainability, forcing multilateral lenders to pitch in with some debt relief?

But Portugal s debt levels are still highly problematic by historical benchmarks (based on my research with Carmen Reinhart).

First, household debt levels are enormous, capturing a quarter of income, with mortgage payments taking the lion s share.

With governments around the world (including Germany s) accumulating unprecedented levels of peacetime debt, markets are worrying about sustainability.

Of course, these sacrifices might be worthwhile were they helping Greece reduce its public debt to manageable levels.