The Wall Street bust

Commentary and weekly watch by Doug Noland

I still owe readers a thorough analysis of the Q2 2008 flow of funds. For now, I'll just point out some data relevant to the current state of acute fragility.

Looking back, Total Non-Financial Debt (NFD) expanded US$578 billion during 1994. By 1998, NFD growth for the year had surpassed $1.0 trillion. Non-Financial Credit increased $1.153 trillion in 2001, $1.415 trillion in 2002, and $1.676 trillion in 2003, before reaching the $2.0 trillion milestone in 2004. Incredible as it was, debt expansion then surged over the next fateful three years. Growth rose to $2.319 trillion in 2005, $2.428 trillion in 2006 and then to last year's record $2.561 trillion.