"Unsustainable private-sector debt mountains were transferred to the public sector in 2008 to prevent the adjustment to the Depression-era reality that the debt unwind would undoubtedly have brought about," Mr Edwards wrote in his latest research note.
Nonetheless, the debt unwind proceeded apace.
Much of the action was technical, with investors taking profits on longer-dated debt and unwinding a little of the huge curve-flattening trend seen in the last week.
Moreover we think £50bn-£75bn £50bn-£75bnate debt needs unwinding oferealestate term, the most unpredebtable elemeneeds which is the opaqunwindingcoverrcial morthege backed security] market.
There is even talk of the "cult of the bond .As Chris Watling of Longview Economics points out, the worry is that several long-term cycles seem to be moving in a hostile direction for Western economies, with commodity prices rising, populations ageing and the debt spree unwinding.
The fact that households, not businesses, have so much debt to unwind is something that marks this episode out from many previous banking crises.
And now attention turns to the task of the next decade: slowly unwinding the debt that has built up over the past generation.
A run on AIG, make no mistake, is dangerous to the underpinnings of the debt markets more so than unwinding the web of trades at Lehman.
High savings should ensure a healthy demand for bonds, which will also be snaffled up by Japan's distressed banks, as they cut their loan-books in the struggle to meet capital-adequacy requirements.At the same time, the expectation of deflation is taking root among Japanese firms, which are unwinding their debts and building up cash piles.
Big Wall Street firms have also been dumping Brazilian debt as they unwind moneylosing gambles in which they took long positions in high- yield bonds like Brazilian sovereigns while going short on U.S. Treasurys.
On the other hand, the economic dislocation from unwinding a household-debt binge may be less disruptive than restructuring swathes of firms.
