I'll let Niall Ferguson field this one.
This is all about debt right now. This is the end of the age of leverage. We managed to juice the economy, particularly in North America, with debt---household debt, debt on bank balance sheets, as well, of course, with government debt---and we've reached the point of no return. There's a sort of ceiling, which turns out to be 355% of gross domestic product, in the case of the United States. Once your total debt level gets that high there has to be some kind of de-leveraging. The big question is how do we unwind these enormously burdensome debts? In the past, big debt crises were mainly crises of public debt, and they usually ended one of two ways: either the government defaulted on the debt, or it was inflated away, because the currency simply depreciated. I don't think it's going to be so easy this time, because this isn't just a crisis of public debt. It's a crisis of private debt, and it's quite hard for there to be a general default on, let's say, half the mortgages in the United States...That is where we're heading at the moment.....
355% is an approximation.
It's impossible to tell precisely when the event horizon is reached. We may have already crossed it.