Highest debt-to-GDP ratio nations in Europe

[h=2]1 Country 01 – 243.2%[/h][h=2]2 Greece– 173.8%[/h][h=2]3 Country 03– 139.7%[/h][h=2]4 Country 04– 138.9%[/h][h=2]5 Italy– 132.5%[/h][h=2]6 Portugal– 128.8%[/h][h=2]7 Ireland– 122.8%[/h][h=2]8 Cyprus– 112%[/h][h=2]9 Country 09– 110.7%[/h][h=2]10 Country 10– 104.5%[/h][h=2]11 Country 11– 103.8%[/h][h=2]12 Belgium– 99.8%[/h][h=2]13 Country 13 – 95%[/h][h=2]14 France– 93.9%[/h][h=2]15 Spain– 93.8%[/h][h=2]16 Country 16– 92%[/h][h=2]17 Iceland– 90.2%[/h][h=2]18 UK– 90.1%[/h][h=2]19 Country 19– 89.2%[/h][h=2]20 Country 20– 89.1%[/h]Source: World Economic Forum

Click to expand...

UK has a horrible debt to GDP but not as bad as France, Belgium or others like Spain, Portugal Greece etc.

Are any of these countries doing enough to turn this around? What chances of reducing the debt to manageable levels and what effect will this have long term on Europe?

Without a link to the source, it hard to really judge what we are seeing with so many nameless countries

backpacker said:

Without a link to the source, it hard to really judge what we are seeing with so many nameless countries

Click to expand...

If you put a poll with the US on it sometimes, the whole conversation gets skewed. Anyhow, here's the World Economic Forum link - we'll see how long before the thread now becomes about the US / Obama etc/

https://www.weforum.org/agenda/2015/07/the-20-countries-with-the-greatest-public-debt/

Infinite Chaos said:

If you put a poll with the US on it sometimes, the whole conversation gets skewed. Anyhow, here's the World Economic Forum link - we'll see how long before the thread now becomes about the US / Obama etc/

https://www.weforum.org/agenda/2015/07/the-20-countries-with-the-greatest-public-debt/

Click to expand...

Thanks for the link.

The problem with EU nations will be their inflexibility to address these issues in comparison to other nations that have freer hands. I am surprised that Spain's number is relatively low given their economic woes in that last couple decades.

Infinite Chaos said:

If you put a poll with the US on it sometimes, the whole conversation gets skewed. Anyhow, here's the World Economic Forum link - we'll see how long before the thread now becomes about the US / Obama etc/

https://www.weforum.org/agenda/2015/07/the-20-countries-with-the-greatest-public-debt/

Click to expand...

The USA has the highest debt to GDP in the history of mankind, and it's all Obama's fault. Buy gold!

There. Didn't want to disappoint anyone.

I wonder if that high debt to GDP is actually hurting the economies of those nations at the top of the list?

It makes no sense for a country to address the debt issue until the crisis is solved since it would worsen the crisis and therefore the deficit. Governments must spend in crises and cut spendings when everything is well, this is the ABC of any sound economic policy.

Besides governments and enterprises must seek to use their debt to generate a higher growth. Since the growth exceeds the lending rates, especially for governments, productive loans pay for themselves.

However governments must make sure that borrowing is the most efficient way to generate growth. Otherwise they do hamper growth and they must make sure it is socially profitable.

Dittohead not! said:

The USA has the highest debt to GDP in the history of mankind, and it's all Obama's fault. Buy gold!

There. Didn't want to disappoint anyone.

I wonder if that high debt to GDP is actually hurting the economies of those nations at the top of the list?

Click to expand...

Interesting, and reminds me of debate I was involved in a number of years ago. The following may interest.

Audit of the Federal Reserve Reveals $16 Trillion in Secret Bailouts

https://www.sott.net/article/250592...eserve-Reveals-16-Trillion-in-Secret-Bailouts

Click to expand...

AND

The Fed Audit

The Fed Audit - Senator Bernie Sanders of Vermont

Click to expand...

Note the supplied links includes links to actual report of FED audit.

Nice debate issue.. kodus.

First off.... Debt to GDP is an idiotic measuring stick. Why? Lets look at Greece. According to this, their debt is huge, and one would assume that it is rising right? Wrong. It is actually down 50 billion since 2011.. The UKs debt has risen faster than Greeces, but the rise has been "hidden" because of the UKs GDP growth. Also in Greeces case, not only did debt go up (and now down), but GDP collapsed faster which meant the % of GDP numbers went crazy. Hence the Debt to GDP does not show the true natur of the problem.. if you see it as a problem.

Second off.. Debt composition. Where is the debt owed too? Take the nr. 1 debitor nation Japan. A huge portion is owed to... Japan. Japan has one of the lowest rates in the world.. how come? because most debt is to it self.. its people. You have a similar situation with Italy, but not to such a degree.

Third... A normal household has debt to income in the many 100s of %, and yet that is not a problem. But when a nation has such a debt, then suddenly it is. Why? Politics.. politicians are basically abusing the ignorance of the public and "kitchen table economics" to push a political narrative. In this case, the whole "omfgs so much debt" bull**** started with the GOP loosing power in the US and seeing that the US national debt going up (something it had for the last 30 years, under GOP rule mostly), they used it as a political tool to maintain what power they had and improve slightly. In Europe the conservatives also abused this narrative.. with Germany at its head... to force countries into austerity, that in fact in the short term caused a lot of pain and was necessary. They still push the narrative, but now to cut a way at our welfare state... it is still political bull****. Now the reality is that unlike households, countries wont loose all their income. The problem is when the debt they own is in foreign currency, because then it has to be paid back in that currency. This can cause some serious problems, but in the case of say Japan, where most debt is with its own people... printing presses! This causes inflation, but if you know Japan.. that would be welcome!

Now looking past the political aspect, and looking only at the economic... Debt is bad, but we cant function without debt. So too much debt is bad.. but what is too much? When you cant pay your debt repayments, either by cash in hand or more debt. In Greeces case, it has been both, but for the other countries... it has not been a problem at all. Why was it a problem with Greece? Trust.. their abuse of our trust means we have to lend them money so they can pay their bills.. well almost. So we set conditions.. conditions no other nation have. Any pressure on say Spain with higher rates, are in fact speculator driven and not driven by reality.

Infinite Chaos said:

UK has a horrible debt to GDP but not as bad as France, Belgium or others like Spain, Portugal Greece etc.

Are any of these countries doing enough to turn this around? What chances of reducing the debt to manageable levels and what effect will this have long term on Europe?

Click to expand...

It's sad the U.S. is on that list, when looking at what our GDP is and all the economic advantages we've enjoyed over the decades since WWII. All of it has been squandered. If If I was Greece, I'd be looking at exiting the EU and then pulling an Iceland, and stiffing all the banks. It's that or be a slave for generations and continue selling off pieces of your country.

PeteEU said:

~ look at Greece. According to this, their debt is huge, and one would assume that it is rising right? Wrong. It is actually down 50 billion since 2011.. The UKs debt has risen faster than Greeces, but the rise has been "hidden" because of the UKs GDP growth. Also in Greeces case, not only did debt go up (and now down), but GDP collapsed faster which meant the % of GDP numbers went crazy. Hence the Debt to GDP does not show the true natur of the problem.. if you see it as a problem ~

Click to expand...

The core of the issue remains ability to pay off the repayments on your debt. You're trying to mask that while the UK's proportion of debt rose from 70% to 90% we have still been able to repay that debt and raise GDP whereas the same cannot be said of Greece.

One of the masked countries was Singapore - over 103% debt to GDP but like Japan, that debt is mainly internal. Unlike Japan, Singapore is also an international debt creditor nation.

Infinite Chaos said:

The core of the issue remains ability to pay off the repayments on your debt. You're trying to mask that while the UK's proportion of debt rose from 70% to 90% we have still been able to repay that debt and raise GDP whereas the same cannot be said of Greece.

Click to expand...

That is correct... but Greece cant pay its debt because no one trusts them.. yes the irony in many ways.

One of the masked countries was Singapore - over 103% debt to GDP but like Japan, that debt is mainly internal. Unlike Japan, Singapore is also an international debt creditor nation.

Click to expand...

Yes but it does not matter... it only matters if the country in question has a "trust issue", like Greece. Lets say there is a revolution in Singapore, then suddenly their debt becomes mega risky.. and then it becomes a problem, regardless if it is 103% or 70%.

% to GDP is a really stupid number as there is too much that can influence it and "normals" dont understand it really and the "in know" people exploit it for their own financial benefit. The reason that Greece has "problems" paying their debt, is because no one wants to lend them money to pay that debt. Very few countries pay their debt payments with actual "profit money", but pay with more debt, but usually at a cheaper interest rate. Greece could not, because no one trusted them. This lead to the Greek tragedy, and them having to actually pay their debt from their "profits".. profits that poofed because of lesser tourists and other problems, which meant lesser economic growth and higher costs. Even to this day, the Greek budget is actually balanced enough to pay back the debt, but not the interest.. the interest on some of their debt is so high, that it is causing more problems. Most countries with high debt, dont have that problem.

People should look at total debt and the structure of that debt, and then of course at the motives of those who are talking down a country because of its debt. In Greeces case, yes there was trust issues.. In Italy´s or Spains.. no, that was mostly made up bull****. In the UKs case, there is a long tradition since Maggie, to ignore signs that cause alarm in other countries..

PeteEU said:

That is correct... but Greece cant pay its debt because no one trusts them.. yes the irony in many ways.



Yes but it does not matter... it only matters if the country in question has a "trust issue", like Greece. Lets say there is a revolution in Singapore, then suddenly their debt becomes mega risky.. and then it becomes a problem, regardless if it is 103% or 70%.

% to GDP is a really stupid number as there is too much that can influence it and "normals" dont understand it really and the "in know" people exploit it for their own financial benefit. The reason that Greece has "problems" paying their debt, is because no one wants to lend them money to pay that debt. Very few countries pay their debt payments with actual "profit money", but pay with more debt, but usually at a cheaper interest rate. Greece could not, because no one trusted them. This lead to the Greek tragedy, and them having to actually pay their debt from their "profits".. profits that poofed because of lesser tourists and other problems, which meant lesser economic growth and higher costs. Even to this day, the Greek budget is actually balanced enough to pay back the debt, but not the interest.. the interest on some of their debt is so high, that it is causing more problems. Most countries with high debt, dont have that problem.

People should look at total debt and the structure of that debt, and then of course at the motives of those who are talking down a country because of its debt. In Greeces case, yes there was trust issues.. In Italy´s or Spains.. no, that was mostly made up bull****. In the UKs case, there is a long tradition since Maggie, to ignore signs that cause alarm in other countries..

Click to expand...

You're basically arguing Greece's free lunch has stopped not because of financial mismanagement and lack of ability to grow but because somehow the international community "lost trust" in Greece.

Why did they lose trust? It really isn't so simple Pete. It's more than just people not trusting Greece to pay back, it's also whether Greece has the means to produce anything that allows it to grow and pay back its debt. If economics was as simple as a country borrowing to repay current debt then all countries would continue borrowing and never seek to repay anything or bother to grow or expand.

Infinite Chaos said:

The core of the issue remains ability to pay off the repayments on your debt.

Click to expand...

Every point of growth deflates your debt to GDP ratio.

If countries want to decrease their debt, they just have to stabilize their budgets and wait twenty years. But this would be stupid to do as long as the crisis is not over, and counter-productive. Right now they must SPEND to reboot the economy.

Complete BS. The last time I read the debt to GDP ratio was 1.06. Japan is over 2.

Dittohead not! said:

The USA has the highest debt to GDP in the history of mankind, and it's all Obama's fault. Buy gold!

There. Didn't want to disappoint anyone.

I wonder if that high debt to GDP is actually hurting the economies of those nations at the top of the list?

Click to expand...

How is this an issue if the only outcome is manageable inflation? The US inflation goals are 2 percent per year. You actually need inflation, cause deflation is way worse.

Auvergnat said:

It makes no sense for a country to address the debt issue until the crisis is solved since it would worsen the crisis and therefore the deficit. Governments must spend in crises and cut spendings when everything is well, this is the ABC of any sound economic policy.

Besides governments and enterprises must seek to use their debt to generate a higher growth. Since the growth exceeds the lending rates, especially for governments, productive loans pay for themselves.

However governments must make sure that borrowing is the most efficient way to generate growth. Otherwise they do hamper growth and they must make sure it is socially profitable.

Click to expand...

Fishking said:

It's sad the U.S. is on that list, when looking at what our GDP is and all the economic advantages we've enjoyed over the decades since WWII. All of it has been squandered. If If I was Greece, I'd be looking at exiting the EU and then pulling an Iceland, and stiffing all the banks. It's that or be a slave for generations and continue selling off pieces of your country.

Click to expand...

It isn't sad really at all. We have untapped economic potential still that places like Japan do not have. We are a resource and land rich nation. Of all the nations on the list, Ireland would concern me most. Even if their plans to get it below 100% in the near term pans out (they are down to 103% this year), they still have a high debt per capita problem to deal with and they do not seem to have the ability to light up the burners on their economy to outgrow the debt. The US can just monetize its debt if it came to it. Ireland cannot.

sookster said:

How is this an issue if the only outcome is manageable inflation? The US inflation goals are 2 percent per year. You actually need inflation, cause deflation is way worse.

Click to expand...

Both inflation and growth independently increase the GDP volume, and therefore decrease the debt-to-GDP ratio. At about 5% a year for a 3% growth and 2% inflation!

In a case of stagflation (inflation but no growth), a government could theoretically let its debt deflate. But it would be slow and a zero growth despite technological innovation means a sick economy, and this must be addressed. Usually this requires public spending to create an inertia and to pave the way for deep changes (redesigning urban areas and transportation, redesigning fiscality, large automation plans, energy savings, education, public research, ...).

Cuts in public budgets should occur as soon as the growth kicks in, not before. Democratic governments are really bad at that because the electoral agenda does not match the economic one. Not that authoritarian governments do better.

You can easily print treasuries to pay for treasuries. This has been debated 3000000000 times on these forums. But my evidence is look at the world around you. Look at Japan. It's fine.

Auvergnat said:

Both inflation and growth independently increase the GDP volume, and therefore decrease the debt-to-GDP ratio.

In a case of stagflation (inflation but no growth), a government could theoretically let its debt deflate. But it would be slow and a zero growth despite technological innovation means a sick economy, and this must be addressed to create an inertia. Usually this requires public spending.

Cuts in public budgets should occur as soon as the growth kicks in, not before. Democratic governments are really bad at that because the electoral agenda does not match the economic one. Not that authoritarian governments do better.

Click to expand...

sookster said:

Complete BS. The last time I read the debt to GDP ratio was 1.06. Japan is over 2.

Click to expand...

His post was in jest.

sookster said:

You can easily print treasuries to pay for treasuries. This has been debated 3000000000 times on these forums. But my evidence is look at the world around you. Look at Japan. It's fine.

Click to expand...

If you print treasuries then you create inflation, which is very dangerous if not contained.

It is not happening in Japan because it suffers on the other hand from a deflationary economy, so both compensate each other. However they may be creating a ticking bomb because their central bank is holding larger and larger shares of their debt (public + private), and one day they will want to cancel it, something that will cause a high inflation.

Now you think that Japan is fine. No, it is not. Their purchasing power has stagnated since the 90's, with declining wages, declining prices and low investments. They nevertheless have a surprisingly low unemployment (3%), but this is because wages fall quickly, because many people have left the labor statistics (housewives, emigration, etc) and because many are overqualified for their jobs. Japanese themselves see Japan in crisis, with a gloomy labor landscape, as reflected in many of their movies and novels, and the popular figure of the unemployed salaryman or youth.

Infinite Chaos said:

You're basically arguing Greece's free lunch has stopped not because of financial mismanagement and lack of ability to grow but because somehow the international community "lost trust" in Greece.

Click to expand...

Hmm yes and no. Each countries "trust" is based on its economic, political, legal, social and some what recent historical aspects of said country. If we look at Greece, the economic, political and legal aspects were totally shattered causing social problems. The state budget was a lie, because of politicians with the help of overseas banks hid debt and lied about the economic health of the country and the legal system not only has not delt with that corruption but allowed "lazyness" to creep into the tax system. Because of this, the trust in the country was shattered, meaning that Greece could not borrow anywhere, and had bills to pay. Because it was in the Euro, it could not pay bills internally by printing money and so on and so on.

I would not say Greece had a "free lunch" as you claim, it lied, hence the trust was gone and hence its ability to run the country on a day to day basis was lost.

Why did they lose trust? It really isn't so simple Pete. It's more than just people not trusting Greece to pay back, it's also whether Greece has the means to produce anything that allows it to grow and pay back its debt. If economics was as simple as a country borrowing to repay current debt then all countries would continue borrowing and never seek to repay anything or bother to grow or expand.

Click to expand...

No that is not true. That is political bull****. Greece has an economy, has industry and has growth prospects.. if it is able to deal with the structural problems that ultimately caused the crisis there. This includes thinning the public service (which was not that large actually vs other countries). It is now way smaller than say the US public service. Fix the pensions that in some areas were nuts and now they have been cut so much that you cant live off them.. and tackle the tax system. On this one, the problems have been many.. hard to change over 100 years of thinking when it comes to taxes. Then there was/is the public owned companies that should have been privatized decades ago, restructuring of the labor market and so on. It is a lot, but lots of it is generic crap that all nations have to tackle sooner or later.. except the tax system one.

As it stands now, it pays its bills, just not the interest on the debt. Get rid of the debt and it has a massive surplus and has had actual growth in 2014 and 15.. this year it has been negative. Regardless it is not a massive negative as it use too be.

Problem is, the "west", read Germany and the EU, dont want the Greeks to just do what they have always done, but force changes in the country to something better. That is why debt relief is rarely talked about, but everyone knows that most of the debt has to be forgiven.. but not before the structural reforms are in place. Next step might be to temporary suspend debt repayments and/or interest payments as a carrot for the Greeks.. that is IF they keep down the road set out for them. Point is, the Greeks need to keep taking their medicine and not revert to old ways...

remember, the old way for Greeks was to just print more money and ignore the structural problems. They cant do this anymore, and that is a good thing.. same for Spain and Italy and France.. of course they will kick and scream but eventually they will see the light or suffer the economic crush of a default.

But my point is still the Greek situation is a very special situation in the industrial world.. they lied about the size of their debt and budget deficits.. the rates on their bonds were based in large part on that their size of their debt, the budget and of course growth... 2 out of 3 being lied about.. bad for your credit rating and bond yields.

You dont have that problem in Italy, Spain, Portugal, Ireland and so on... and all those countries have all tackled the structural problems that we all knew they had.. well Italy slowly cause it is Italy. In the end of the day.. had Greece not lied, then they would not be in the situation they are today, because the markets and EU would have gone in much earlier and over time to correct their mistakes. Here it happened basically overnight.

PeteEU said:

~ of course they will kick and scream but eventually they will see the light or suffer the economic crush of a default.

Click to expand...

And what is that default? It's an inability to repay debt because GDP is at a bad ratio to that debt.

But then, two posts ago you were saying it's a flawed system.

Auvergnat said:

Every point of growth deflates your debt to GDP ratio.

Click to expand...

This I can agree, now we need to convince PeteEU.

Auvergnat said:

If countries want to decrease their debt, they just have to stabilize their budgets and wait twenty years. But this would be stupid to do as long as the crisis is not over, and counter-productive. Right now they must SPEND to reboot the economy.

Click to expand...

That I'm not so in agreement, I'm not a fan of throwing money at a problem to solve it.

Which is it through interest rates and taxes. We as a society want lower taxes all the time, which is going to put more on the interest rates. Interest rates are so low, and have stayed low, because there hasn't been undesired inflation in the eyes of The Fed, otherwise they would increase interest rates.

Deficit spending rises, GDP rises, which includes more transactions, which are taxed.

So yes, there are safety nets in place to keep the rate at which the deficit increases under control. It causes inflation, but there's also a market. Inflation happens because overall demand increases because there's more money to spend. It becomes a problem if peoples' incomes stagnate in compared to inflation. We refuse to raise raise wages in accordance to inflation, increasing the risk of hyperinflation, because people can't buy stuff. There wouldn't be a problem if people had the buying power to keep up with prices. But we as a society refuse to keep taxes where they are and refuse to pay people more.

Instead of focusing on how much we are printing, because again, the cycle is sustainable (with how the interaction of banks, The Fed, and The Treasury interact [printing]), we should focus on how we as a society can buffer the inflation, to add another layer of protection. Taxes are huge. Interest rates will help, obviously inflation isn't an issue otherwise they would raise it. The rate at which GDP increases to debt, matters. And I would argue if we paid people more to meet the demand and supply of the market, this would be another layer of protection. AND, there has to be a continual growth of the money supply to meet the demand for money. For an explanation of printing, go to this thread post #152 .

Auvergnat said:

If you print treasuries then you create inflation, which is very dangerous if not contained.

It is not happening in Japan because it suffers on the other hand from a deflationary economy, so both compensate each other. However they may be creating a ticking bomb because their central bank is holding larger and larger shares of their debt (public + private), and one day they will want to cancel it, something that will cause a high inflation.

Now you think that Japan is fine. No, it is not. Their purchasing power has stagnated since the 90's, with declining wages, declining prices and low investments. They nevertheless have a surprisingly low unemployment (3%), but this is because wages fall quickly, because many people have left the labor statistics (housewives, emigration, etc) and because many are overqualified for their jobs. Japanese themselves see Japan in crisis, with a gloomy labor landscape, as reflected in many of their movies and novels, and the popular figure of the unemployed salaryman or youth.

Click to expand...

Infinite Chaos said:

And what is that default? It's an inability to repay debt because GDP is at a bad ratio to that debt.

Click to expand...

Err no... the default is the inability to pay your bills...period. Has absolutely nothing to do with your GDP or bad ratios. They US had a technical default in 1979, because it failed to pay a bill on time.

But then, two posts ago you were saying it's a flawed system.

Click to expand...

Debt to GDP is a flawed system

This I can agree, now we need to convince PeteEU.

Click to expand...

Convince me of what? It shows the flaw of the debt vs GDP. Just because you grow your economy by 2%, does not mean you debt is going down. As long as your growth is higher than the amount of new debt you are pilling on, then your debt vs GDP will go down.. regardless if your actual debt burden is going up. Hence the statistic is flawed.

Take your own country.. your debt to GDP ratio went from 85% in 2012 to 89% in 2015.. a 4% point change. Now the actual debt went up by 20%. The difference? Economic growth. Did your debt go up by 4% points? No.. it went from about 1.2 trillion to 1.56 trillion.

So again.. Debt vs GDP is an idiotic measurement. You can easily have a debt vs GDP ratio go DOWN, but your actual debt going up.. It says nothing of the ability of the country to actually collect taxes from this increased growth... for example, UK economic growth was good, but taxes income went down in some quarters... wait what?

Treasury sees £25billion shortfall from income tax receipts amid low wage growth | This is Money

That was a good growth year...

That I'm not so in agreement, I'm not a fan of throwing money at a problem to solve it.

Click to expand...

Not doing does not work.. we saw that in the great depression, where government spending was cut massively as well as private spending.. tanked the economy totally.

The trick is that the state compensate for the low or negative growth in the private sector, and when the private sector gets over its hissy fit, then the state cuts back and pays back the debt it has racked up by lessening the blow to the over all economy by ramping up its spending.

Of course very few countries do this.. but that is the theory..

sookster said:

...

Click to expand...

So you would like to print money to pay for public spending, but use something else to combat inflation?

a) Higher taxes or credit rates. They would harm private spending in order to boost public spending, this does not seem advisable for many countries.

b) Forceful wages/prices increase. It would look like a good idea for a closed economy. But it is more uncertain in a global free market, since some industries would suffer from foreign competition. A decrease of the trade balance would result in a currency devaluation, and therefore in inflation because of importations. Except that the euro and dollar are reserve currencies, so people always want them: if your goods do not interest them, they will lend you or buy your real estate.


However, as you said, there is currently room for more inflation. Most of economists agree with that.