The paradox of deleveraging

As Paul McCulley of Pimco, the bond investor, put it in a recent essay titled “The Paradox of Deleveraging,” lately just about every financial institution has been trying to reduce its leverage – but the plunge in asset values has nonetheless left these institutions with more debt relative to their assets than before.

That’s from Paul Krugman, who cites Irving Fisher as well.  Arnold Kling asks for 20 percent down.  Here is Arnold’s exit strategy.  Here is John McCain, up to 48.5 on InTrade or is that just because of the recent Gallup poll?