Read somewhere that around 75% of US debt is held by institutions in the US (pension funds, etc). Will look for a source

Good question!  Bush Sr. once referred to Reagan's economic poliicies during the leadership race as voodoo economics (he chanced his view after accepting the VP nomination).  The more I read about economics, the history and theory of money and finance I think it's all voodoo.  Economics is ideology in my opinion and not science.  It's full of mathematical formulas and models but all based on ideological assumptions/biases/points of view.

Still there are some interesting economists worth reading to give an idea of the origin of the financial meltdown and what the future holds. Mark Wiesbrot and Dean Baker are two.  Here Weisbrot writes on the debt crisis that wasn't: http://www.counterpunch.org/2011/08/05/the-crisis-that-wasnt/

"China likes to talk about addiction but it is just as hooked on debt: US debt that enables it to invest its surplus funds without undue risk and to go on exporting at a profit. China holds only 8.1% of the US debt, but it is the prime source of foreign loans, ahead of Japan (6.4%) and the UK (2.3%) — which confers rights but imposes constraints. If China stopped buying treasury bonds, or if the dollar fell, its vast (dollar) reserves would collapse".

http://www.counterpunch.org/2011/09/02/hooked-on-debt/

According to wikipedia: http://en.wikipedia.org/wiki/US_debt#Ownership_of_debt