From the Financial Times today, an article written by Carmen Reinhart and Kenneth Rogoff discussing one possible aftermath of the buildup of debt after the financial crisis: slow economic growth.
The authors point out that the United States, developed Europe, and emerging Europe will all be struggling with large debt loads. Other emerging markets are not quite so overloaded. Emerging markets have their own set of risks, but clearly the global opportunity set for tactical allocation should be expanded.
[...] Ken Rogoff and Carmen Reinhart have discussed debt levels in relation to economies and point out that debt-induced sclerosis—very slow economic growth—results when the debt becomes too unwieldly to service. Based on historical precedent, they point out that very slow growth tends to occur when debt grows to about 90 % of GDP. Given the US GDP for the last fiscal year was about $14.66 trillion, we are already over 400%. An American contemplates the national debt [...]