The “bad” convergence I referred to was the speed at which income increased in the catching-up countries, which largely took place through debt, either public or private. As a result, their debt with the rest of the world increased tremendously over the past decade.
1  For a more detailed account on the topic, see Nishimura, K. G., “Unconventional Policies of Central Banks: Restoring Market Function and Confidence,” Remarks at the Panel Session “Monetary Policy Boundaries: Alternative Instruments and Policy Coordination” at the Money and Banking Conference sponsored by the Central Bank of Argentina on Sept.1, 2009, available online at http://www.boj.or.jp/en/type/press/koen07/ko0909a.pdf.