A Tale of Two Debt Write-Downs
Greece and Japan have debt burdens that are unsustainable, and other countries are likely to suffer a similar fate. While it would have been better if these countries had never allowed excessive debt to mount, it is time to recognize that many debts, both public and private, simply cannot be repaid.
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SINGAPORE – At the end of 2015, Greece’s public debt was 176% of GDP, while Japan’s debt ratio was 248%. Neither government will ever repay all they owe. Write-offs and monetization are inevitable, putting both countries in a sort of global vanguard. With total public and private debt worldwide at 215% of world GDP and rising, the tools on which Greece and Japan depend will almost certainly be applied elsewhere as well.