PIMCO: The US Falls Into the Sovereign Debt Ring of Fire

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In the latest
investor letter
, Bill Gross brings up a chart he likes to call
"The Ring of Fire."

As you can
see, this chart/graph details the amount of debt a country has in
relation to their GDP.

Countries in
the fire zone are headed for hell in a handbasket. PIMCO predicts
these countries, which include
the U.S.
, will increase
public debt
to greater than 90% over the next few years, which
will in turn stall growth.

most vulnerable countries in 2010 are shown in PIMCO’s chart "The
Ring of Fire." These red zone countries are ones with the
potential for public debt to exceed 90% of GDP within a few years’
time, which would slow GDP by 1% or more. The yellow and green
areas are considered to be the most conservative and potentially
most solvent, with the potential for higher growth.

Don’t miss:
world’s 10 biggest sovereign risks

This is
reprinted from Business

24, 2010

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