FT.com / A sovereign vulnerability scorecard “From Andrew Garthwaite and his team at Credit Suisse, a scorecard of OECD countries most likely to face government debt funding problems.
‘The US does look vulnerable, but given that it has a reserve currency, it can use this to manage its funding problems. Its external debt is largely dollar denominated (and thus again allows it to ‘inflate’ its way out of its problems). We therefore believe it is inappropriate to rank the US against all other countries and we show the US as a memo item at the bottom of our table.’
Garthwaite and team actually believe that, setting “peripheral Europe” aside, the UK is the G7 country most likely to face a severe government funding problem. Oh, and Garthwaite notes that the last time Britain had to be bailed out by the IMF in December 1976 the cyclically-adjusted primary deficit and the debt to GDP ratio were only 4 per cent and 53 per cent, respectively. They’re 7 per cent and 78 per cent now.”