U.S. sanctions, intended to pressure the Venezuelan regime, create a legal barrier that prevents creditors and the government from even beginning negotiations on restructuring its defaulted debt. The path to resolution is ironically blocked by the very policy designed to force it.

Despite the ECB's powerful TPI backstop, it's unlikely to be used for France. Market turmoil there is driven by fundamental concerns over France's own lack of fiscal consolidation, not an external shock. This highlights a crucial limit of central bank intervention: safety nets are not designed to solve domestic political and fiscal failures.

Iraq's massive 80% debt write-off was an anomaly driven by the Bush administration's goal of building a stable democratic ally. The U.S. directly ran the country and had strong political motives for deep debt relief. This unique context is absent in Venezuela's case, making the Iraq precedent a poor guide.

When national debt grows too large, an economy enters "fiscal dominance." The central bank loses its ability to manage the economy, as raising rates causes hyperinflation to cover debt payments while lowering them creates massive asset bubbles, leaving no good options.

While emotionally appealing, the legal concept of "odious debt" is unworkable. Defining what constitutes an "odious regime" or illegitimate use of funds is a slippery slope that could destabilize the entire sovereign debt market, as almost any government could be labeled as such by someone.

CME's CEO frames a competitor's choice to clear US Treasury futures in the UK as a national financial security issue. He argues that US sovereign debt should be governed by US law, not UK bankruptcy rules, to prevent scenarios where foreign regulators could halt trading or bust trades, impacting the entire US market.

Unlike past crises like 2008, the coming debt sustainability crisis will be different because the government's own balance sheet is the source of the instability. This means it will lack the capacity to bail out the market in the same way, fundamentally changing the nature of the crisis.

Under the law, a debt claim is treated the same regardless of who holds it. However, the negotiation strategy changes dramatically depending on whether the creditor is an original lender or a hedge fund that bought the debt at a steep discount, impacting the perceived fairness of any offer.

History shows a strong correlation between extreme national debt and societal breakdown. Countries that sustain a debt-to-GDP ratio over 130% for an extended period (e.g., 18 months) tend to tear themselves apart through civil war or revolution, not external attack.