Do sovereign debt ratios matter? Jul 20th, 2010 by Michael Pettis Posted in Balance sheets, Banks, Financial crisis, History In the past few weeks I have been getting a lot of questions about serial sovereign defaults and how to predict which countries will or won’t suspend debt payments or otherwise get into trouble. The most common question is whether or not there is a threshold of debt (measured, say, against total GDP) above which we need to start worrying. Perhaps because I started my career in 1987 trading defaulted and restructured bank loans during the LDC Crisis, I have spent...