All governments pay attention to the bond market.  Each year, maturing debt must be re-borrowed along with whatever new deficit is planned. When the total begins to push the limits, lenders seek an additional interest margin, debt service costs rise and the deficit ratchets upwards. Eventually, and sometimes quickly, the shutters come down.  The lenders, thousands of fund managers around the world, will lend no more money if risks of default become too worrisome.  Only governments with no plans for new deficits and a low level of inherited debt, or even net sovereign assets (think Norway), can ignore the bond…

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