[click to open source post]

I came across this amazing table (hat tip: Robert Paterson’s Weblog) that lays out the percentage of each European country’s national debt to GDP compared to the US. The author applies a 5% debt repayment rate to estimate how long it would take to pay it off (assuming no more additional debt).

While the US is far better than the 19 other countries listed, I am more concerned about the continued growth US debt – it appears to be growing unabated.

Irish eyes are NOT smiling. It’s hard to imagine an influx of foreign investors providing meaningful real estate demand from Europe anytime soon, in addition to the restraint caused by the rising dollar relative to the euro.

Reality check – At 97% financing for 19 years, the US is beginning to feel like an FHA mortgage. Hey, isn’t FHA losing money?


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7 Responses to “[97% Financing] National Debt In Perspective”

  1. Ira says:

    I realize that this “data” makes for a cute one-liner mortgage tie-in, but as I couldn’t find any real attribution for these numbers, I’m calling shenanigans. If we’re talking about sovereign debt, can we please use a real data source, like the CIA factbook or the World Bank?

    https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html

    Or, if we’re talking Total External Debt, that’s very misleading these days. There are net debtors and creditors, but all these countries are interlinked these days. Ireland (or more specifically, private Irish debtors) owes money to the UK, but the UK owes money to Ireland. Net it all out and you wind up with much lower numbers, and you just have to worry about systemic imbalances, like China owning a significant chunk of global debt.

  2. Thanks Ira – not sure if you saw the link on the post during your research but the list was based on external debt.

    http://en.wikipedia.org/wiki/List_of_countries_by_external_debt#cite_note-3

    Definitely more cute than a soverign debt analysis as you suggest. Thanks agin for the insight!

  3. Ira says:

    Doh. I obviously missed the attribution, since it wound up back at the same source I cited. :-X

  4. A. Lewis says:

    But the US is not borrowing at 5%. The U.S. is borrowing at between 0.1% and 3.5%.

    • Correct – its just interesting to look at – the 5% referred to how much principal would be paid down each year without paying any interest. Of course that would be a wildly conservative assumption so I was more interested in how we match up to Europe using this metric.

  5. A. Lewis says:

    Um – scratch that last post, I wasn’t paying attention. On the contrary, I should have said ‘but the U.S. isn’t coming close to putting 5% of GDP to it’s debt each year right now…’

  6. Wow. This is amazing, thats a lot of money. I like this post, I mean compared to Europe we are still in deep.