29 Apr 2012

The Extent of Debt : BIS figures

To back up Ellen Brown's point that the whole world is entangled in a Web of Debt masterminded by the banking system, I took the latest figures from the Bank for International Settlements.

The BIS just published its quaterly report on "Preliminary International Banking Statistics for end-December 2011".  There is a mine of information in there, but I was particularly interested in the "Consolidated Banking Statistics" which "report banks' on-balance sheet financial claims on the rest of the world and thereby provide a measure of the risk exposures of lenders' national banking systems. The quarterly data cover contractual lending by the head office and all its branches and subsidiaries on a worldwide consolidated basis, ie net of inter-office accounts. Reporting on this contractual lending on an immediate borrower basis allows the allocation of claims to the bank entity that would bear the losses as a result of default by borrowers. Total claims are broken down by maturity, sector (banks, non-bank private sector and public sector) as well as vis-à-vis country."

By downloading Table 9E ("Foreign exposures on selected individual countries, ultimate risk basis") I was able to compile the following table for the level of exposure for the 30 countries included in the report. 

It makes for very sobering reading.  The total exposure of the 30 countries in the dataset is over $32.1 trillion. But the bottom line, which includes the debts of all countries (not just the ones covered in the report) reaches $41.7 trillion.

The winner is the USA which has foreign claims and other potential exposures that total $8.2 trillion dollars. But the UK isn't doing badly either since it has exposure of over $5 trillion. The most impressive figure is the level of Non-bank private sector debt in the UK, which adds up to an eye-watering $1.73 trillion. Intringuingly public sector debt in the UK is actually relatively low - so much for Osborne and Cameron's theory that the problem is overspending in the public sector.

France isn't that far behind with total exposure  close to $2.2 trillion, although the level of non-bank private sector debt is only 20% of the UK.

I'm not sure what can be done for the UK's citizens who have apparently gobbled up close to $29,000 of foreign private debt for every man, woman and child in the country. While I can see how you can justify using the Bank of England to print money to pay off the national debt, it is less easy to see how you could use the same trick to cancel this massive level of personal debt. Unless of course, the UK government just decides to kickstart the economy by printing more central bank money and using it to launch a wide range of programs to get the economy going again. That's no doubt what Ellen Brown would be suggesting.

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