As has now been made clear, the governments of the world are going to issue a ton of debt, and use that throw at the busted economy, in the hope that this will somehow bring the economy round.
In order for that to happen though, someone has to buy the stuff, and who will that be?
Germany got a rude shock recently when the failure to sell 100% of a bond that was offered. Countries without German's relative good health will surely have problems. So, who would buy government debt anyway.
When it comes to US, the main holders have been Asian, especially China, and Japan. Only looks like China has gotten cold feet about using the cash other than to hold up the social situation in China. (Good use of the countries resources I would say.)
A lot of people are also saying why should they invest in an instrument that gives no return? With interest rates heading to zero, and the market looking overinflated anyway, then there has been a huge bubble in the treasuries markets, especially US treasuries, as described here.
So, given that the States and the UK, and others all want to have eye popping levels of debt, who is going to buy it? More, will they buy when the downside is so high for so little return? Debt, even sovereign debt, will have to offer a suitable return to be worth the risk.
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