Discussions continue between Greek debtors and various creditors. While expectations are high some sort of managed default will be agreed upon, it is still uncertain which owners of Greek sovereign debt will incur large losses.

This story is likely to be repeated with other highly indebted European countries in the next several years. Unless there is a substantial global economic rebound, other overly leveraged countries and businesses are going to suffer.

The U.S. is not exempt from this potential day of reckoning. With excessive levels of debt at the government and consumer levels, the U.S. is also highly vulnerable to a slowing global and domestic economy.

In a January research report, McKinsey Global Institute discussed a number concerns resulting from global debt levels. Focusing on the borrowing situation in the U.S., McKinsey indicated outstanding household debt has fallen approximately $584 billion from the end of 2008 through mid-2011. This drop in leverage represents roughly a four-percent decrease in household debt.

On the surface, a four-percent decrease in debt appears to be a good start down a long road. This decrease in outstanding household debt has been driven by the significant defaults that have occurred on residential mortgages and consumer credit. Defaults on residential mortgages have accounted for approximately 70 percent of the decrease in overall U.S. mortgage debt during this period.

Of those defaulting on residential mortgages, it is estimated as much as 35 percent of these borrowers decided to walk away from their residential mortgage obligations because they owed more on the mortgages than the value of the homes. While these actions have decreased reported debt levels, substantial losses have been incurred by the owners of this debt. Additionally, housing values have been dragged even lower as a result of those who have decided to strategically default on their mortgages.

Laws governing mortgage defaults differ by state. In states where there is no recourse to the borrower, other assets and income are not affected by these strategic loan defaults.

Even with the significant decrease in mortgage and consumer debt, necessary individual deleveraging is still years in the future. A more robust economic environment, with associated increase in employment rates and potentially higher wages, would likely provide enhanced opportunities to pay down individual and even government debt levels.

Whether viewed on a U.S. basis or more globally, the overall debt levels remain dangerously high. Effects of this excessive debt have become more and more apparent, as the U.S. and world economies have slowed. Until personal and government debts are decreased to more manageable levels, heightened default risk will remain in the capital markets.

Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.