Soaring Debt in Many Big Economies

[marcus]

From https://www.business-standard.com/w...ower-growth-and-instability-126012701521_1.ht
Title : Soaring debt in richest economies risks slower growth and instability
By Patricia Cohen , NYT , Jan 27 2026

For decades crushing debt has spread misery in the world’s poor and lower-income nations. But the menace of unsupportable borrowing that now hangs over the global economy emanates from some of the richest countries.

Record or near-record debt in 6 of the rich G7 nations : United States (122.5% of GDP), Japan (234.9% of GDP) , Britain (103.9% of GDP) , France (116.3% of GDP) , Italy (137.3% of GDP) and Canada (112.5% of GDP) threaten to hamstring growth and sow financial instability around the globe.

Poster's Note : debt of some others : China (96.3% of GDP) , India (80.4% of GDP) , Brazil (92.0% of GDP) , Spain (100.6% of GDP) ; all 2025's debt according to Wikipedia) .

.. it means countries must make interest payments with money that otherwise could have paid for health care, roads, public housing, technological advances or education. The hunger for more and more loans has also pushed up borrowing costs, gobbling up a bigger share of taxpayer money. It can also push rates on business, consumer and car loans, as well as mortgages and credit cards; and drive up inflation...

What happens if there’s a financial crisis, a pandemic or a war? What if there’s a sudden need for more social services spending and jobless relief because of changes caused by artificial intelligence or climate-related disasters? Borrowing a lot of money quickly becomes more difficult — and expensive — when the national debt is already sky-high ...

 

[Jaime C]

The US has done so many short sighted things, that a new pandemic, or serious financial event will cause worldwide pain.

Because of tariff threats to most major trading partners, many have unattached themselves from the US economy in a big way. It doesn’t look good for the US in the long term.

 

[harryopal1]

Many years ago I had a weekly radio national half hour program in Australia called "Money, Money money." Interviewed lots of economists and read a bit. Didn't understand how finance worked then and still don't

I put Marcus's post on ChatGpt and then added my thoughts as in the next paragraph.

Take three economist and you have at least 5 different theories, maybe more, about how money works. It is all a bit like the Titanic, the iceberg has sliced along the sides and the ship is filling with water."

Chat GPT replied to Marcus's post and my confused thoughts with pages and pages of theory. I have copied just one bit.

Why economists disagree​

You’re right — take three economists, you get five theories:

Theory / School	Basic idea about debt/money	Social impact
Classical / Neoclassical	Debt is money borrowed today, repaid tomorrow; too much reduces growth	Opportunity cost, higher taxes, higher interest rates
Keynesian	Debt can stimulate growth if spent wisely during downturns	Positive if productive, negative if wasted
Modern Monetary Theory (MMT)	Countries with own currency can issue debt almost freely; inflation is the limit	Social impact comes from inflation, not debt itself
Ricardian Equivalence	Borrowing now = higher taxes later; rational households adjust spending	Neutral effect if people save in anticipation of future taxes
Austrian / Monetarist	Debt signals misallocation of resources; inflation risk high	Can lead to boom-bust cycles, recessions

Takeaway: Debt is not inherently “good” or “bad” — it depends on how it’s used, who owns it, and the macroeconomic context.

---

And I still don't understand. Just as confused as ever.​

 

[Balifrog]

It's all about who holds you debt...

Remember executive order 6102 ?

I am sure all our US educated members know the story ?

 

[Bob]

It's all about who holds you debt...

Remember executive order 6102 ?

I am sure all our US educated members know the story ?

Considering it was in 1933 my memory's pretty hazy, but yes who holds the debt is important. Just having a huge debt is a major issue too. Servicing debt takes money away from improvements and the resultant inflation really harms those on fixed and low incomes.

 

[harryopal1]

I asked ChatGpt for a small list of countries showing International debt, a % related to GDP who owns the debt and a one word summary of the state of their economies.

National Debt Snapshot (Selected Countries)​

Country	Govt Debt (USD, approx.)	Debt as % of GDP	Who Mainly Owns the Debt	One-Word Economy
Australia	~$0.9 trillion	~50 %	Mostly domestic (banks, super funds), some foreign	Stable
Indonesia	~$0.55 trillion	~38–40 %	Domestic institutions + foreign + multilaterals	Growing
United Kingdom	~$4.1 trillion	~100–101 %	Domestic investors & Bank of England; sizeable foreign	Flat
France	~$3.9 trillion	~116–117 %	Domestic banks/central bank + foreign investors	Strained
Germany	~$3.2 trillion	~62 %	Largely domestic (banks, insurers, Bundesbank)	Moderate
United States	~$38 trillion	~125 %	Mostly domestic; ~20–25 % foreign (Japan, China, others)	Resilient
Canada	~$2.6 trillion	~113–114 %	Mainly domestic pension funds & banks	Stable
Papua New Guinea	~$16–17 billion	~50–53 %	Mix of domestic + multilaterals + China/Australia	Vulnerable
China	Very large (varies by definition)	~90 % (broad govt) / ~25 % (central only)	Overwhelmingly domestic (state banks, institutions)	Challenged
Russia	~$400 billion	~15 %	Mostly domestic (banks, central bank)	Resilient

---

A couple of important clarifying notes​

• China: headline debt depends hugely on whether you include local governments and financing vehicles. That’s why you see two very different %-of-GDP figures quoted.
• Russia: unusually low debt ratio by global standards, but economic performance is heavily shaped by sanctions and geopolitics, not debt sustainability.
• Papua New Guinea: modest debt in absolute terms, but high sensitivity because of commodity dependence and external creditors.

 

[Balifrog]

The problem is this :

• High Foreign Exposure: Roughly 60% of French debt is held abroad, rendering the country vulnerable to fluctuations in market confidence, as seen in recent credit rating concerns.

 

[marcus]

From https://finance.yahoo.com/economy/policy/articles/mohamed-el-erian-warns-global-122717537.html
Title : Mohamed El-Erian warns global bond selloff isn't over
By Cris Tolomia , September 2026

... Professor at the University of Pennsylvania's Wharton School and chief economic adviser at Allianz, El-Erian told CNBC: "I don't see any appetite in the U.S. for immediate fiscal consolidation. So I suspect we will continue to see upward pressures on yields," ...

"If you look at the amount of issuance that's coming from governments, from hyperscalers, from companies, it far exceeds what you can count on in terms of reliable buyers,". "And that's why there's been pressure on interest rates." ..

China is less willing to purchase for geopolitical reasons, .. while Japan and Gulf countries face domestic constraints. El-Erian also pointed to Norway's sovereign wealth fund decreasing its allocation to U.S. government bonds .. signal that traditional holders and buyers are becoming less reliable ..

El-Erian singled out the U.K., Japan, and France as the G7 economies he views as most exposed to sovereign debt stress ..

".. modest moves in U.S. rates tend to produce outsized swings in British yields. On France, he noted a shift from the dynamics that prevailed during previous episodes of eurozone stress. "In the old days you would worry about Italy. Italy is trading inside France," he said, adding that the focus had moved to one of the eurozone's core members rather than its periphery.

Global government bonds faced intense selling pressure this week,.. the 10-year U.S. Treasury yield reached 4.788% .. while the 10-year Japanese government bond yield crossed 3% for the first time since 1996 and the 10-year German Bund yield hit its highest point since 2011 (10-year France's bond rose to 4.23% .. the highest rate since 2008. https://finance.yahoo.com/economy/policy/articles/france-sells-bonds-highest-rate-114849906.html) ...