Total global debt (govt+corporate+household) stands at $230 trillion which is more than 300% of total annual Gross Domestic Product (GDP) of the entire world. The United States recorded a government debt equivalent to 104.17 percent of the country’s GDP. If we look at the US debt and narrow the focus to just government debt, then we find that the US accounts for $20 trillion out of nearly $59 trillion or about 1/3rd.
There is too much focus on this $ 20 trillion of US govt debt and less focus on debt owed by emerging market which stands at about 50% greater than that figure. Emerging Market corporate debt share of the global credit market has been increasing and now accounts for about 18% of all U.S. dollar-denominated corporate debt in the world. Emerging Market debt has increased 300% since 2005 alone. The USA has the biggest, most viable economy and reserve currency of the world. If US is the core then rest of the world is Periphery. The foreign bond defaults in 1931 is what created the Great Depression and it did not NOT because the US defaulted, but because the USA adopted AUSTERITY and allowed deflation to dominate – the same mistake made in Europe today.In absence of global growth pickup ,I see defaults outside of US and it can originate from Europe or emerging markets corporates who have borrowed heavily leading to more capital outflows from rest of the world into US creating huge demand for US dollar.
In times of crisis Capital always shifts back from periphery to core