The real story this week is something Mohamed El-Erian, the economist and former PIMCO chief who now advises Allianz, said on Times Radio that ought to have stopped the conversation cold.
“What happened in the US … doesn’t stay in the US,” he said. “We felt it in the UK.”
British interest rates rose this week, in part, because of what is happening in Washington’s debt markets. Britain didn’t do anything to invite that. It simply shares a financial atmosphere with a country carrying $40 trillion in debt, a burden El-Erian prefers to describe another way: “the doubling in just 10 years.” This year alone, he noted, the U.S. government is paying 15 percent more in interest than it did last year.
That is the altitude we need to be watching from. Everything that follows: Canada, Scott Bessent’s bond-market intervention, Walmart’s earnings call, is a symptom of something larger. American instability is no longer an exclusively American problem. It travels through interest rates, capital markets, supply chains and prices into countries that had no vote in creating it. The rest of the world is increasingly paying rent on a mess it didn’t make.
