Why compare the total debt to the ANNUAL economic output? One year is an arbitrary length of time.
Debt equal to one year of GDP is accepted as the "point of no return" at which most countries will have to default on their debt. This is why it is so significant. It is a very reliable indicator of future default, and not very far in the future either.
That particular indicator, debt>annual GDP, is far from meaningless. In fact, the very meaning is, your screwed. You are absolutely, 100%, no-nonse, over-the-waterfall, "I've fallen and I can't get up", FUBAR screwed.
“Debt equal to one year of GDP is accepted as the “point of no return” at which most countries will have to default on their debt. This is why it is so significant. It is a very reliable indicator of future default, and not very far in the future either.”
I disagree. On its own, the comparison has no meaning. At the very least, one should also consider WHEN the debt is due along with the size of the debt.
Comparing the annual GDP to the total debt due in 1 year would be more interesting — but still far too simple to predict a “point of no return”.
Analogy: if you weigh more than the total amount of food you eat in 1 year, you are too fat; you’ve reached the point of no return. That’s nonsense. It makes no sense to consider the food you eat in a year, when the calories are mostly metabolized in a few days.