Update 2: Put up a second graph showing debt of Spain.
Update: I just read the most recent article of Stiglitz. I mostly agree. However, I’m not quite sure what he means when he says that
Spain and Ireland had fiscal surpluses and low debt/GDP ratios before the crisis.
I updated the graph below with the Reinhardt and Rogoff data, now including Ireland. Not exactly a low debt to GDP ratio. I’m pretty positive that one cannot ignore this amount of debt, whether it’s held by private or government.
This data comes from “This Time is Different” by Carmen Reinhart and Kenneth Rogoff. “Eight Centuries of Financial Folly” is the subtitle. It’s the first complete (over time) piece of empirical work on the full spectrum of “financial crisis”.
In the plot you can see the importance of privately held debt in a country. Look at the UK for example. Periods where the sum of public and private debt is lower than public debt only correspond to periods where the country was a net saver, i.e. the private sector saved more than the public sector borrowed. (I think.)
UPDATE: As a special courtesy, here’s the data for this graph in a google spreadsheet. of course you’ll have to change the code to read that in with R. Download as .csv and use read.csv() instead of read.xlsx() in the code.