Roche: sovereigb debt holes...

"...By the end of this year, OECD sovereign debt will have exploded by nearly 70 per cent from 44 per cent of GDP in 2006 to 71 per cent. According to the Bank of International Settlements, it would take fiscal tightening of 8-10 per cent of GDP in the US, the UK and Japan every year for the next five years to return debt levels to where they were in 2007.

Some say that a temporary increase in sovereign debt always happens after a credit crisis. Research by US economists Carmen Reinhart and Kenneth Rogoff shows that sovereign debt usually rises by an average of 85 per cent within three years of a financial crisis. But this credit crisis is like no other. Our own calculations show that the budget deficits of crisis-struck countries now equal more than 25 per cent of global savings and 50 per cent of savings within the OECD. And the increase in debt ratios is on a different scale because it simultaneously affects all the big economies, not just an Argentina..."