3 Nov 2011

An even bigger list of debt countries

I've found an even bigger source of information about external debt levels of different countries. It's on the EconomicsHelp.org website. You can see the figures for 100 different countries here. And I've compiled a figure with a list of the 23 countries with the highest per capita debt.
To my amazement, it turns out there is a country that is even worse for external debt than Ireland. Would you believe that it is Luxembourg? There, each citizen has an external debt of 3.75 million dollars (!!!). I can only assume that this is because Luxembourg is the centre hub for the ClearStream banking system, and that maybe that doesn't count.

But another amazing fact is that number three on the list after Luxembourg and Ireland is Norway, which has external debt of 538% of GDP and a per capita debt level of $455,000. Incredible.

Importantly, these numbers don't reflect net debt. People in Luxembourg may owe lots of money to people in other countries, but if people in other countries owe lots of money to people in Luxembourg, then this can all cancel out.

So, where can I find the total amount of net debt for each country? Answers on a postcard please...

But in the context of the current crisis, the real question concerns the debate about Greek debt. Greece is 16th with $47,636 per person. This compares with Ireland where is it $503,914 per person, and the UK where it is $144,338. Greece is even behind France ($74,619) and Germany ($57,755). Portugal is also relatively modest ($46,795).

No, the real problem is the ability of the markets to play with the rates of interest that governments have to pay. Look at the latest figures for September, and you'll see that while the rates for Germany (1.83%), the UK (2.41%) and France (2.64%) are all reasonable, those for Greece (17.78%) and Portugal (11.34%) are through the roof.

We must not let the markets play around like this. If the ECB can lower its key interest rate to 1.25%, it should use this rate to lend countries the money they need to pay off their debts to the banks. Any further borrowing that the countries want to make can be on the open markets. But we should not be allowing the banks to charge obscene levels of interest - a practise known as usuary that was a heinous sin in the Bible and the Koran. It still is a heinous sin.


  1. from Wikipedia: As the Bank of International Settlements explains, small countries with
    large financial sectors tend to have disproportionately large gross
    external debts as well as holding large cross-border debt assets.Luxembourg is a net creditor country.

    Don't take statistics at face value!

  2. Anonymous,

    Thanks for commenting. As I mentioned myself, the fact that Luxembourg has a massive financial sector does mean that the numbers are probably meaningless. But I would say that the modest external debt of countries like Greece go against the view that the Greeks behave unreasonably. I don't think they are the ones that have been buying millions of expensive flat screen TVs that they can't afford.