The massive level of debt in the developed world (321 percent of combined GDP) is one of the main reasons recovery from the global financial crisis has been sluggish. Governments around the world absolutely need to address this issue—but how, exactly?
Daniel Stelter, a senior partner at BCG and coauthor of the Collateral Damage content series, explored this question in a recent presentation at BCG's Worldwide Officers' Meeting.
Many suggestions for solving the debt crisis have been shot down as ineffective or have proved too unpopular to really work. Recognizing the problems that doomed those ideas, Daniel suggests four key steps to help debt-burdened developed economies embark on the road to recovery:
Rebalance global demand.
Write down excessive debt.
Establish a cooperative growth agenda in the euro zone.
Enact systemwide risk management.
Daniel also recommends several actions for businesses to consider in order to navigate this challenging landscape and best position themselves for success as governments undertake the recovery process.