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Bill Gross, the head of Pimco, the world's largest bond fund, published a disturbing chart that he labelled "The Ring of Fire", which encapsulates how compromised the public finances of so many major industrialised countries had become. The toxic combination of high public debt and high budget deficit levels of not only Japan, Greece and Italy, but also France, Spain, the United Kingdom and the United States.
A very different picture characterises the major emerging-market economies. Indeed, an extension of "The Ring of Fire" chart to the emerging-market economies reveals that growth in these economies is likely to be supported by relatively sound public finances. Read the full article.
