With 20 per cent of global output, the United States imported 60 per cent of global capital (on a net basis) on the eve of the crisis. This would not have been a problem if this capital had been invested in expanding productive capacity. Unfortunately, not enough of it was. Now, the debt cycle has decisively turned.
Creditors demand repayment, and global growth will require global rebalancing. BIS central bankers’ speeches  3  How to pay down debt Austerity is a necessary condition for rebalancing, but it is seldom sufficient. There are really only three options to reduce debt: restructuring, inflation and growth. Whether we like it or not, debt restructuring may happen.