The Economist has an article comparing deleveraging over a bunch of countries since the crisis. According to a McKinsey report, while the US and South Korea have reduced total debt as a percentage of GDP, in many countries, notably Japan, France, and Spain, total debt has soared.

How's New Zealand doing? Let's use Reserve Bank figures, and stick to foreign debt. At the end of 2005, total foreign debt was 107%, composed of 96% corporate and 11% government debt. This seems like the level we should be shooting for. This soared to 138% in March 2009, all of the increase coming in corporate debt. We got this down to 127% in June 2011, but the following bad-for-everyone quarter saw this rise to 134% (111% corporate, 22% government). One message is that one bad quarter (that occurred for reasons outside NZ's control) can undo two years of good work -- yet another reason to fear Eurodefault. Still, the overall process of increasing government debt while the private sector deleverages seems to be sound. Absent any further shocks (ha), the private sector should be back down to pre-bubble debt levels in a couple of years. The question, though, is whether confidence has been so shaken that even then we won't have returned to our long-run path.