3 Nov 2011

The top twenty worst countries for debt

I found a fascinating slide show on the CNBC site called "The worlds biggest debtor nations". A guy called Paul Toscano took the data on External Debt from the World Bank's website and figures for GDP to determine the worst debtor nations. He ranked the different countries on the basis of how big their External Debt was in 2009 as a function of GDP. External debt is not the same as government debt because it also includes debts owed by private individuals and companies. I compiled the numbers he provided in the table below.
The results are really quite surprising. For example, Greece, which is currently the centre of a huge row at the G20 meeting in Cannes, is actually only 15th on the list - behind  countries like Germany, France, Switzerland. The Greeks only owe about $54,000 each. That is peanuts compared with the UK, where debt per inhabitant is nearly $147,000 and totals 413% of GDP (well over twice as bad as in Greece). But the world champion by far is  Ireland, where each citizen effectively owes over half a million dollars, and debt is nearly 14 times the total GDP.

How come interests rates in Ireland are less than half those for Greece? Could it be that there is a deliberate attempt by the markets to destabilize the Euro?  And why is noone complaining about the level of external debt in Switzerland (over 400% of GDP)?

Finally, it's clear that levels of debt are generally totally ridiculous. Just adding the external debt of the 20 countries in the list produces a total of over 54 trillion dollars.  I used to think that if there is so much debt around, it must be because someone (the Chinese, the Arabs ??) has lent the money. But, now that I have read about the joys of fractional reserve banking, I have realized that most of this debt just corresponds to money that the banks have created out of thin air. It's about time we waved another magic wand and made the debt disappear.  What does that wand look like? It looks like a Financial Transaction Tax.


  1. nice chart... any idea of those countries assets though? always 2 sides to a coint

  2. Do you mean state assets? Or the assets of companies? Or the assets of individuals? I'd be interested to have some figures.

    Obviously, things like the value of the property in a country are very dubious. It's not because house prices in the UK have increased 10 fold that the "assets" of UK residents have gone up. Sure, someone whose house has quadrupled in value can indeed sell up and go and buy somewhere relatively cheap (it used to be the case in France, for example). But as soon as more than a few percent of the population try that, and the house price bubble would  burst.