While both Hayek and Keynes did a good job explaining who one could come into such a dire situation like a deep depression Keynes did a far better job at giving the economic science (finally) the framework and the politicians the tools to get out of such a crisis. The effects of monetary policy in the last years has been remarkably close to what Keynes described as the liquidity trap, and textbook models (IS-LM, in a Mankiw) stemming from that era fit very close indeed.
Lessons learned from this prolonged crisis have been many, perhaps too many to discuss here in detail. Anyway Ireland with a young population and deep reforms, depreciation agains the European benchmark the DM, access to ever more open markets and a beggar-thy-neighbour approach to taxes roared mightily in the 90s. While the Euro prevented further deprecations, the high productivity partly due internal boom, fueled to a good degree to ready consuming and hefty construction aided by loose credit by highly leveraged banks, facilitated by much capital and workforce influx from the rest of Europe and led to a great success story. Sadly the Irish had a similar shock as many Americans, with big elephant in the room, the lacking ability to print money and to depreciate heavily to boost an small, integrated economy compared to the rest of Europe. Additionally they shouldered, perhaps out of a mixture of pride, the call of duty and a lot of pressure the banking debts and went for austerity. Not surprisingly the wages have been very sticky, internal devaluation was hardly there and unemployment is very very high compared to better times.
In short high leverages tell just part of the story, but if the story includes lax regulation, low rates, a lot of (in hindsight) risky debt, a booming economy and housing prices seemingly going only up and maybe a good headline like "Celtic tiger" helping to sell it to foreigners with money and willing hands then a bad bust is almost certain.
The deep irony is, as usual, that when prices have fallen massively be it in construction or in equity all is suddendly perceived as much much riskier as when those prices had been sky high. It is quite natural that way, as without that psychology the economy and the markets would not fluctuate that widly.
BTW Switzerland has it's own currency, a reputation of solidity and as a haven of security. Traditionally in such a crisis the money is not leaving the swiss depots, but it is coming in. Additionally the Swiss federation as very low debt and a lot of firepower and there is hardly doubt that it could support the big Swiss banks. In fact it has been fighting (successfully) very hard to keep the Franken from rising by all that demand further into the sky. The printing press must have been very busy indeed.
P.S: I will try to link some of the papers in question. Macroenconomics have been surprisingly helpful, if you (as usual the difficult part) looked at the right things.
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