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Our long-term investment megatrends
The End of the Debt Supercycle
Debt supercycles are very long in nature – on average about 60 years. The current supercycle began as World War II ended and much reconstruction was required. In the early stages of all debt supercycles, GDP and debt grow 1:1. That ratio declines as the supercycle matures and, towards the end of all debt supercycles, GDP only grows about $0.25 for every dollar of added debt. China and the US, the two economic superpowers of the world, are both there now.
As more and more debt is added to ensure continued GDP growth, more and more capital is deployed to service that debt, i.e. capital that ideally should be deployed productively is increasingly used to service existing debt, and that holds back productivity gains and economic growth. This is the most important reason why productivity growth declines towards then end of all debt supercycles.