Total debt as percentage of GDP

[Beet]

One of the flaws of "national" debt, is that it is really only a measure of government debt. But 80% of our economy is in the private sector (other than federal, defense, and state & local governments). To arrive at the real "national" debt, you need to take into account not only the government debt (relatively small) but also private credit market debt. So discuss this chart:



It provides quite a different (and more disturbing) picture than jfern's chart.

[2952-0-0]

So USA = big, big, big Iceland?

[Platypus]

Here's Australia. Not as extreme as the US, but still riding for a fall (and this graph basically sums up the argument against Costello's economic management, which is a little unfair when taken by itself, but does pierc e the'economic messiah' bubble surrounding him.

[Beet]

So USA = big, big, big Iceland?

Iceland's debt was more like 1000% of GDP. But more crucially, Iceland's debt was denominated in other currencies. So there are some important differences, however, I am not ruling out a similar ending. We'll see...

[Smid]

Here's Australia. Not as extreme as the US, but still riding for a fall (and this graph basically sums up the argument against Costello's economic management, which is a little unfair when taken by itself, but does pierc e the'economic messiah' bubble surrounding him.

The Government is responsible for Government Debt. Costello didn't use the budget to pay for the private sector's debt and nor should he have. The increase in private sector debt during this period was a reflection of the historically low interest rates during the time. Costello paid of $96 billion of government debt over a course of ten years, saving the taxpayer $8 billion in interest repayments each year. If it were not for the sound economic management of the previous government in paying off the debt, Australia would be in a far worse condition today and not so well placed to weather the current financial crisis.

Some private sector debt is also beneficial - when it's being used to pay for expansion - so long as the borrower can service the interest repayments, a mortgage is not a bad thing. Conversely, bad private sector debt is credit card debt, which is typically used to make consumer purchases. That's why Rudd's stimulus package wasn't really a stimulus package - it was all spent on buying plasma tvs and wii fits. Doesn't help our economy if it's going straight overseas. Might have stirred the retail sector briefly, but there'll be no lasting benefit to show for the ten billion he spent. The one thing that has helped curb spending was Keating's introduction of compulsory superannuation. That had the effect of reducing wages - not in absolute terms, but in take-home pay terms because the superannuation payments are basically enforced savings.

[Sam Spade]

It's an very important graph and I think it has continued the parabolic climb this year too.

Another one of my favorites, if we're going to post charts - deals with the velocity of money.

[Scam of God]

One of the flaws of "national" debt, is that it is really only a measure of government debt. But 80% of our economy is in the private sector (other than federal, defense, and state & local governments). To arrive at the real "national" debt, you need to take into account not only the government debt (relatively small) but also private credit market debt. So discuss this chart:



It provides quite a different (and more disturbing) picture than jfern's chart.

I just love how it spikes in the years 1980-1988. Gee whiz, wonder why.

[AveMaria]

well i do wonder what is the current stats and graphs will there be spike going to increase... ?

[Franzl]

well i do wonder what is the current stats and graphs will there be spike going to increase... ?

English?

[WillK]

Chart that breaks it down by type of debt:



http://paul.kedrosky.com/WindowsLiveWriter/U.S.TotalCreditMarketDebtbySector1929200_93C7/debt-trend-breakdown_2.jpg

[Yelnoc]

/Depression.

[King]

I have one question.  I think I know the answer but I want some confirmation:

Which economically significant nations have a debt % of GDP that is low?  As far as I know, the only two major players who aren't running a fairly large total debt are the Chinese and the Saudis; and both China and Saudi Arabia built the foundation of their economy on exports to these debted nations.

Okay, one more question.

Doesn't debt, by rule, only becomes a problem when the collectors show up at the door step?  To me, this seems like it isn't as bad of an issue as it looks on paper--because on a global scale, if any country tried to collect on another one's debt or stopped the loaning process, that country would eventually get screwed over in the chain reaction such a move would start.  Thus, nobody will ever make the move to collect on this debt.

Then again, I'm not an economics professor.  Please correct my logic, wizards.

[WillK]

Doesn't debt, by rule, only becomes a problem when the collectors show up at the door step?

Debt becomes a problem when the interest payments consume current revenues
and/or
when no new buyers of debt can be found.

Its an issue of whether the borrower continues to pay as scheduled or has to take difficult steps to keep paying.

[opebo]

Absolute proof of the preferability of the Keynesian redistributionist social-democrat (american liberal) model, and the disastrous nature of the supply-side neo-liberal model.