Why investors must not flee to 'burning houses' to escape debt crisis

ON BONDS

Working in financial markets is currently like living in a hall of mirrors. Things which logic suggests should fall, rise. Things which ought to loom large appear small. It is hard not to wonder if things that presently seem overwhelming will not in due course be seen as mere way-stations.

The Greek public debt is not small – at around $520bn, it is about four times the size Argentina’s was when it defaulted in 2002. But it is not so large it could not be paid off outright with the personal fortunes of a couple of dozen Silicon Valley entrepreneurs.  Culling the bank accounts of the most successful among us may not be the best way to pay the debts of the most profligate, but it puts the scale of the issue into perspective. The public debt of the US, by contrast, stands at around $9.5trn. That of Japan is $11.9trn. US gross public debt is currently equal to an entire yea...