The sheer amount of world debt threatens global economic recovery, says Harvard economist Niall Ferguson.
And while the United States can inflate its debt away by printing more money, Greece and other countries on the euro don’t have that option, which will cause the cost of their debt to rise.
This, in turn, will weigh on economic growth around the world as markets realize how much risk there is, and the yields on bonds increase.
"I think we have a situation where Greece is leading the pack but other countries will follow," Ferguson told CNBC, alluding to forecasts that Greece's debt will balloon to more than 120 percent of gross domestic product this year.
The spread on 10-year Greek bond yields over the German Bunds, a measure of how risky markets see the country's debt, recently surged to its highest level since Greece adopted the euro.
Economies unburdened by government debt fare far better, Ferguson points out.
"China is now the engine of growth in the world economy,” he says.
“It makes you realize how far global economic power is shifting from West to East."
China shouldn’t buy a “large chunk” of Greek government debt to help rescue the nation because the securities are more risky than U.S. Treasuries, Yu Yongding, a former adviser to the Chinese central bank, told Bloomberg.
“It is unreasonable for an economist to support a diversification away from an unsafe asset class to a much more unsafe asset class,” Yu said.
“Let European governments and the European Central Bank rescue Greece.”
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