[Amid booming stock markets, record corporate profits, and talk of a Japanese economic recovery, it is easy to forget that the world economy is delicately poised atop twin peaks of debt. US public sector debt is now approaching the size of its GDP while Japan's is well over one and a half times and heading towards double its GDP. This means mountains of debt of about equal size on both sides of the Pacific, roughly 7 to 8 trillion dollars each. Viewed from one angle, the Japanese debt is more chronic not only because of its smaller population and larger share of GDP, but because population decline carries with it a shrinking labor force and greater welfare costs. From another perspective, however, the American debt is more serious because it is owed to foreigners, rather than to US individuals and institutions. Paradoxically, a great deal of it is owed to Japan. Only the most carefully calibrated manipulation of interest rates (for many years, close to zero interest in Japan) makes it possible to keep up the necessary flow of funds to lubricate this system, while the two virtually bankupt countries nervously prop each other up.