Excessive debt was in large part due to interest rates being too low for too long. The government, through their central banks, set interest rates and by setting rates low they encouraged companies and individuals to borrow more than they should.
Saying that, the choice to borrow is still with the company/individual and if they borrowed too much to buy and cannot afford to repay then they face the consequences. It is what happens in a free market.
Unfortunately, governments around the world didnt see it that way, and so instead of indebted weak companies going bankrupt and losing them and their shareholders money, taxpayers money was provided by governments to keep them going.
And now we see the result. A global financial crisis built around too much debt on assets of too little value has been transformed into a sovereign debt crisis.
And the main culprit is government thinking it is smarter than the free market. It isn't.
