Debt Crisis | GlobalPost

Lagarde said the global economy faced a “defining moment,” and called on euro zone governments to consider financial risk-sharing steps like common euro zone bonds as a way to tackle the 17-member currency bloc’s sovereign debt crisis.

For the full year of 2011, the bank secured net profits of $1.4 billion, compared with a net loss of $2.2 billion in 2010, signalling sustained recovery for the company.

The United States is cutting its debt. Well, the private sector is, anyway.

That's one key takeaway from an interesting report released today by The McKinsey Global Institute on how economies around the world are handling their debt problems that resulted from the 2008 global credit bubble and subsequent financial crisis.

The US now leads the world's 10 largest countries in cutting its total debt, the report states. South Korea and Australia are the only two other countries where the ratio of total debt (private and public sector) has fallen relative to GDP.

It's an important stat, as McKinsey points out, because lower private debt often clears the way for economic growth, which in turn allows for public debt levels to eventually come down, too.

Here are the report's money quotes on how things are shaking out in debt-ridden America:

Debt in the financial sector has fallen back to levels last seen in 2000, before the credit bubble, and the ratio of corporate debt relative to GDP has also fallen. US households have made more progress in debt reduction than other countries, and may have roughly two more years before returning to sustainable levels of debt.

Two risks remain that could derail the deleveraging trend, McKinsey warns:

COIMBRA, Portugal — An end-of-year journey in the East and West paints a stark contrast in Europe. But it may be deceiving.

The Washington-based lender estimates countries around the world will need $1 trillion in loans over the coming years.

Yesterday, Greece’s private sector creditors warned the government that it urgently needs to break a deadlock in discussions over plans to cut the country’s debt if a default is to be avoided.

Greece must secure a deal before it can receive an urgent second bailout from the EU and IMF, necessary if the county is to avoid defaulting on its debts and potentially being forced to exit the euro zone.

A senior euro zone source is reported to have told Reuters that the US-based ratings agency will downgrade the credit ratings of several euro zone countries later today.

The sales reflect renewed confidence in both countries’ efforts to tackle their debt problems, with newly-appointed governments implementing budget cuts and other austerity measures to cut their respective deficits.

Speaking at a news conference in Frankfurt after the ECB’s monthly meeting, President Mario Draghi said the 17-member currency bloc’s economy is showing “tentative” signs of stabilization.

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