"could any company support debt standing at two thirds of their gross turnover"
A company, no -- but a government, yes, at least for a considerable period of time.
There's nothing quite like those extra options at your disposal if you're a nation-state, e.g. the ability to create more currency and/or tax the citizenry. However, if resorting to such things becomes your primary method of operation, over the long haul you effectively remove that layer of additional power from the equation by the abuse of it, as the market prices in expectations of what it sees is in its own best interests as well as what it expects state responses will be.
Which in itself begs the real question, i.e. how high is too high, or at what level does a nation-state's debt:GDP apple cart tip over? FWIW Japan has been getting away with high ratios for many moons -- but Japan is very different than the USA in many ways that I'm sure you're familiar with.
Since a country can never default in a system where it's allowed to print its own money to make its interest payments and as long as people are willing to accept the newly printed money, nosebleed debt levels can go on indefinitely, until for some reason confidence in the country (i.e. the currency) is lost on a wholesale basis and buyers refuse to roll over or re-fund maturing debt. At that point the offending country becomes faced with being unable to meet its existing obligations and defaults, which comes to weigh heavily on the market value of the currency. Under such a circumstance, the rest of the planet holding that country's scrip immediately heads for the door, triggering an even larger but quick collapse -- which is why these situations always end parabolically.
Unfortunately in terms of forecasting, predicting "the" confidence-losing trigger event depends on so many different variables (not all of which are strictly financial) that it's fairly impossible to foresee the exact timing of a collapse, except perhaps when it gets very close to the event itself (e.g. like an Argentine peso, and more than once).
The Japanese situation I think may be a bit of a red herring -- it has massive current account savings and has purposely manipulated its currency downward, which is hardly the case of the USA. The latest reference I could find is that only 6% of Japanese debt is held by foreigners, whereas foreign ownership of US debt is 4-5 times that level. So what is probably most germane to the overall analysis is how much of a country's debt is held by foreigners, and whose actions are beyond the direct political reach and control of the issuing country's government (although they can arguably still be "herded" by exchange controls).
FWIW, the USA is currently either #30 or #32 on the debt:GDP list depending on which link you prefer --
en.wikipedia.org
cia.gov |
