Fiscal rescue packages, the impact of automatic stabilizers, and the necessary support of the financial system led to a significant increase in public leverage to levels unprecedented in peacetime. Government debt in the euro area will have grown by more than 20 percentage points from 2007 to 2011. The equivalent figures for the US and Japan are between 35 and 45 percentage points.
4  Mishkin and White (2002) emphasize the importance of focusing on financial stability following a stock market crash. To clarify this point, support of the financial system in a crisis does not by any means imply a generalized bailout of threatened, firms. Any support that is given should be done under conditions that minimize potential moral hazards.