In the current crisis government rescue packages and central bank rate cuts are helpful but they cannot replace the need for deleveraging in the banking system. At least parts of the banking sector had decoupled from the real economy. In a sense, this process will result in the focus of business shifting away from ever more sophisticated ways of shunting risk around the financial cosmos, and toward the more traditional banking practice of acquiring, holding and monitoring risks. If the adjustment proceeds quickly, the flow of credit from the financial sector to the real economy will not be impeded for long. However, apart from this deleveraging process within the financial sector, there remains another question: Are not sectors of the real economy sorely in need of some balance-sheet repair? In countries that have experienced a credit boom, such as the U.S., the U.K., Spain and many eastern European countries, both adjustments are necessary--and painful. The longer the reduction of debt is postponed the more brutal the final reckoning. Trying to grow out of the problems – or, put differently, growing into the high debt levels – would mean repeating the “Japanese problem” of the 1990s.