LONDON, England - December 11, 2010 - U.S. Treasuries last week suffered their biggest two-day sell-off since the collapse of Lehman Brothers in September 2008. The borrowing costs of the government of the world’s largest economy have now risen by a quarter over the past four weeks.

Such a sharp rise in U.S. benchmark market interest rates matters a lot - and it matters way beyond Amerika. The U.S. government is now servicing $13.8 trillion in declared liabilities - making it, by a long way, the world’s largest debtor. Around $414 billion of U.S. taxpayers’ money went to sovereign interest payments last year - around 4.5 times the budget of Amerika’s Department of Education.

Debt service costs have reached such astronomical levels even though, over the past year and more, yields have been kept historically and artificially low by “quantitative easing” (QE) - in other words, Federal Reserve Chairman Ben Bernanke’s virtual printing press. Now borrowing costs are 28% higher than a month ago, with the 10-year Treasury yield reaching 3.33% last week, an already eye-watering debt service burden can only increase.

Few on this side of the Atlantic should feel smug. The eurozone’s ongoing sovereign debt debacle has pushed up Germany’s borrowing costs by 27% over the last month - to 3.03%. The market has judged that if Europe’s Teutonic powerhouse wants the single currency to survive, it will ultimately need to raise wads of cash to absorb the mess caused by other member states’ fiscal incontinence.