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

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In the latest PIMCO 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.

PIMCO: The 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.

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This is reprinted from Business Insider.

February 24, 2010