Infographic: World debt crisis
Here's an interesting interactive infographic the TradingFloor.com team has been working on of late.
My take on it is that the sovereign debt crisis in the euro area demonstrates that it is not the size of the debt in isolation that matters, but also the size of the interest expenses and the willingness and capability of the central bank in question to act.
Japan has by far the biggest debt, but the interest rate is low and the Bank of Japan has shown determination to end its multi-year bout of deflation.
On the other hand, the peripheral countries of the euro area saw interest rates spike in the midst of the sovereign debt crisis and the lack of an independent central bank forced the struggling countries to rely on the conservative European Central Bank as a backstop — a backstop the bond market did not find credible.
Click here to explore the infographic.