It is sometimes possible to believe that suffering is worthwhile, a way of paying for past sins. In this light, the age of austerity in which we supposedly live has a sort of redemptive quality. Grit our teeth, and we'll come out the other side, purified and ready for robust economic recovery.
However, after five years, we are in a worse place than when we started.
One would have thought that the recent deleveraging caused debt ratios to collapse. Yet, after the financial maelstrom of the last five years, debt ballooned to a weighted average of 417% of gross domestic product from 381% in June 2007 in the 11 economies most under the market microscope.
Strikingly, in each of Canada, Germany, Greece, France, Ireland, Italy, Japan, Spain, Portugal, the UK and the US, the ratio of total (public and private) debt to gross domestic product is now higher than it was in 2007.
There are variations, and it is notable that debt in the US has increased the least, from 332% of GDP five years ago to 340% today - although we shouldn't draw too much consolation from that, as the statistics do not include social entitlements such as Medicare or Social Security. Add in these off-balance sheet items, and the ratios would look much worse.
Deleveraging is proving impossible to execute. The world is still staggering under a mountain of debt, the costs of which extinguish the "animal spirits" which ought by now to be coming to the rescue. Based on this analysis, we can make five predictions.
First, as deleveraging has not even started yet, the crisis of the world economy has not begun either. All the perceived unpleasantness of the past few years is merely a warm-up act for the greater crisis still to come. The need to get debt levels down is as pronounced as ever in the eurozone, particularly in southern Europe, but also in the US and Japan.
Second, it will take a minimum of 15 years or so for the economy to reach escape velocity and attain a level consistent with healthy growth scenarios. This is because debt levels need to come down by at least 150% of GDP in most countries. History suggests you cannot reduce debt by more than 10 percentage points a year without unleashing major social and political dislocation.
Third, when we do finally start cutting our debt, the economic impact will be massive. Countries like Japan and the US need to increase their primary balance by more than 10 points of GDP, in order to stabilise the ratio of public debt to GDP to 2007 levels: considering negative feedback loops between deficit cuts and growth, each stands to lose more than 20% of GDP against trend.
Current debt crisis is merely a warm-up act