September 2011
Sovereign debt: Debt levels are unsustainable, and nothing, as yet, has been done to improve them
The worry today remains what it was back then: that western economies still have not made the wrenching adjustment from a long period when they required excessive leverage just to deliver even moderate growth into a new period when the markets will no longer tolerate such levels of debt.
Much of the periodic panic that afflicts markets comes from the worry that the western world still has far too much debt in what is a deleveraging cycle. Analysts such as Jim Reid at Deutsche Bank reckon that markets might be slowly starting to share the view that the western financial system built over the past two to three decades might be totally unsustainable. He adds that such a realization might be cataclysmic for markets and would challenge everything the vast majority of financial market...
