Finance & Economy

Government & Policy

Headed for default? Gregory Makoff on global and U.S. debt

March 27, 2024

Headed for default? Gregory Makoff on global and U.S. debt

Catch Greg Makoff’s discussion with Willy Walker about economics, the Argentine economy, and sovereign debt.

I recently had a discussion with Gregory Makoff, an expert in sovereign debt, which he has been studying and covering for well over a decade. Greg is also the author of Default: The Landmark Court Battle Over Argentina’s $100 Billion Debt Restructuring. He began as an investment banker and debt transaction specialist and has since transitioned his work into consulting with businesses and governments worldwide on how they should handle their debts. He is a senior fellow at Harvard’s Kennedy School, where he focuses on restructuring debt.

Can Milei save the Argentine economy?

Javier Milei has made the news, not just because he is the newly elected president of Argentina, but also because he’s had a very unconventional approach to running for office — such as bringing a chainsaw to press events. Argentina has faced widespread economic issues for decades, and Milei has set out to solve these issues. He has told the people of Argentina that there will be pain now, while the government works to solve the economic issues the country faces, but there will be a party later. This approach won him the election. While there is quite a bit of uncertainty around whether or not his approach will work, and even whether or not the laws that need to be passed will be passed, everyone is watching to see what will happen in Argentina.

Why the US debt is more concerning than China’s

When taking a look at both absolute numbers as well as debt-to-GDP ratio, China is much more heavily indebted than the United States. China has about $51 trillion in outstanding debt, compared to its $17 trillion in GDP, whereas the US has roughly $27 trillion in terms of both debt and GDP. However, Greg is much more concerned with the US debt situation because China operates in a closed economy, for the most part, especially when it comes to the debt the country has issued. In contrast, much of the US debt is owned by foreign governments, and we’re at the very beginning of a hockey stick, meaning if we’re not careful, our debt levels can begin to balloon.

Why the US should avoid repeating Argentina’s mistakes

As of late, the US has been acting like Argentina, with a “party now, pay later” mindset. Although Greg does not believe a US currency crisis is imminent, given the demand and liquidity of US bonds, it’s still important to pay attention to our debt levels. After all, the finances of a government don’t differ much from personal finances. We, as a country, owe a lot of money, and keeping ourselves from becoming overleveraged is key.

Want to hear more?

Each week, some of the world’s foremost experts in their respective fields join the Walker Webcast to share their stories and views about what’s happening in their respective industries. To see our list of upcoming guests, be sure to check out the Walker Webcast!

Read Transcript

Related Walker Webcasts

Investing in the Post-Modern Cycle

April 17, 2024

Finance & Economy

The Most Insightful Hour in CRE with Dr. Peter Linneman

April 10, 2024

Finance & Economy

Real Estate

The State of CRE: Aaron Appel, Ivy Zelman, & Kris Mikkelsen

February 14, 2024

Real Estate

Finance & Economy


Check out the latest relevant content from W&D

Learn more

News & Events

Find out what we're doing by regulary visiting our News & Events pages

Learn more