Some things about dealing with debt have unfolded as expected: what cannot go on forever does not do so, and effortless adjustments after several years of rapid credit growth are rare. But other things have been less expected, not just here, but across the advanced economies. In particular, the persistently tepid recoveries remain a surprise.
At present, none of the various hypotheses to explain what is going on seem fully adequate. The accumulation of debt within New Zealand itself, and the disappointed expectations of borrowers who paid very high prices for assets, is clearly playing some role in our low rates of growth of productivity and GDP.