Why Is Gonna Be Hard To Fix Public Debts

By 2014, says the IMF, total public debt in the advanced economies will balloon to an unprecedented 115 percent of their GDP, compared with 75 percent in 2008 (60 percent is generally considered sustainable).

What will the world look like when its largest, most advanced economies have to simultaneously finance huge deficits? Scenarios go from runaway inflation to a global version of slow-growth Japan. No advanced country has defaulted on its government debt since the 1930s, but even that could change. IMF economists note that one reason Western economies survived high debt levels in the past was that investors had few options to move money out of home markets. Now emerging markets can increasingly absorb large amounts of capital, and the day when China, India, and Brazil can shelter investors is on the horizon. That could make debt crises and defaults in rich nations more likely--an ironic turn of globalization.
Newsweek