centre of the storm.

Bad US mortgages and bad mortgage securitisations

forced the entire global financial system into disarray.

This time the crisis is caused by a virus

not by a financial product.

But it is still worth asking whether the $14.3tn in US

household debt might not act as a dangerous accelerant,

making an already serious crisis much worse.

There have been 36m new jobless claims

since the Covid-19 virus took hold of the US economy.

If those translate into waves of defaults

and personal bankruptcies the ripples

will be felt across the world.

But there is some good news.

First, the US government has shovelled billions of dollars

directly into the US economy, cutting cheques directly

to households, supplementing unemployment

insurance, and more.

Second, both borrowers and lenders

seem to have learned some important lessons

since the last crisis.

Household debt relative to household incomes

has come down significantly over the last 10 years.

Falling interest rates have amplified this effect.

Household interest payments relative to household incomes

are not just low; they are at all-time lows.

But there is some less encouraging news as well.

Much of the deleveraging that has

taken place in US households over the last 10 years

has been in mortgages.

Americans owe less on and have more equity in their homes

than they have in years.

But if you take those mortgages out of the picture,

the deleveraging looks much less impressive.

Americans owe only a little less on their credit cards

and against their cars than they did a decade ago.

Even before Covid-19 hit delinquencies on auto loans

and credit card loans were already

rising, as underwriting standards have

fallen as the last crisis has disappeared

into the rearview mirror.

Many of the job losses caused by Covid-19

are in industries like hotels and restaurants

that employ a lot of hourly workers who may not own homes

but are likely to owe money on their cars

and on their credit cards.

Government support should keep these and other workers

current on their debt payments for now.

But eventually, the government's support will stop.

And if the jobs have not returned by then,

there will be a wave of defaults and personal bankruptcies,

the consequences of which we can only guess at.