Announcement

**qwerty** · April 10, 2008, 07:26 PM

Debt/GDP of G7 countries

That's a shocker. But Germany is a puzzler too. Compare these Debt numbers with GDP: https://www.cia.gov/library/publicat.../2001rank.html

Debt/GDP:

US 88%
UK 498%
Japan 35%
Germany 161%
France 220%
Italy 130%
Canada 59%

Outstanding Brits! But why is Germany so high - because of reunification still? That figure for Italy is surprising.

What's going on? Must we look at debt held domestically too?

**The Outback Oracle** · April 10, 2008, 08:59 PM

Re: The CIA shows WHY the British should worry!

I am having a bit of trouble understanding these numbers. This must be Gross debt not net debt. I'd be very surprised if either China or Japan owed the rest of the world money!

**gobears** · April 10, 2008, 09:17 PM

Re: The CIA shows WHY the British should worry!

I am a newbie on itulip, and feel like I am drinking from the proverbial fire hose.

Could someone please explain why the US debt to GDP is 88%, while it is often referred to as being over 200%?

**goldisliberty** · April 11, 2008, 05:41 AM

Re: The CIA shows WHY the British should worry!

Hello gobears,

If one calculates total federal budget debt at $ 9.44 Trillion,

see: http://www.brillig.com/debt_clock/

against the reported US GDP from

https://www.cia.gov/library/publicat.../print/us.html

of $13.86 trillion (2007 est.) (scroll down to "Economy")

the "on-budget" federal debt is 68.1%. But that's only the result using those questionable inputs.

Please consider both the reported "numerator and denominator values," very questionable and see www.shadowstats.com (John Williams' excellent site). Williams suggests serious under-reporting of monetary inflation, price inflation, unemployment and over-reporting of GDP, among other discrepancies.

Additionally, some references to debt-to-GDP ratios, calculate the off-balance sheet liabilities of Medicare, Social Security, and then add in the amount of "societal" debt carried by US political subdivisions (States, counties, etc.) corporations and individuals. As one folds into the "cake batter of debt," more of these debt-carrying components, one climbs a true wall of worry(ing debt) and arrives at debt levels far in excess of 55 Trillion.

At that point the ratio looks like 300 or +400 per cent of GDP. I've see a one graph at www.mises.org suggesting the ratio is 460%. As MEGA would opine: "Yikes!"

So, after far too many words and too few cups of coffee, we see we have many possible ratios...all of which point to a debt load which can only be resolved (in extremis) two ways:

1) default via bankruptcy; or,

2) repay in worthless hyperinflated currency.

Alf Field just posted a good overview and one popular site carried it at:

http://www.321gold.com/editorials/fi...eld041008.html .

Alf suggests (what many here at i-Tulip believe) that Chairman Bernanke has embarked upon a strongly iinflationary, if not hyperinflationary, course of "money printing and excess credit creation."

Relevance to your question? The DEBT-TO-GDP RATIO is too high already for anyone's good and is only going to rise. It is going to rise dramatically, and as Jim Sinclair points out, last night, at www.jsmineset.com :

"The Crux of the Problem:
Money has no motherland; financiers are without patriotism and without decency; their sole object is gain. --Napoleon

Jim Sinclair�s Commentary
After reading this, please review the Formula which will be the last hammer to fall. It will take a miracle for the US dollar to hold .5200 USDX and gold to stay at or below $1650."

For reference gobears, the USDX is currently trading around 71.92 (-0.14).

To wrap up: Bankers only make money with debt. For you and me, debt is usually a liability. For bankers, money we deposit with them is a liability (since they have to pay interest to depositors, usually)...and banks turn such "liabilities" into "assets" by putting the money to work: loaning it out and earning interest.

Debt reduction for bankers is similar to one's being called into one's corporate HQ and being told, "You are going to receive a pay cut."

One of the reasons the explosion in debt is so damaging is that when money is borrowed into existence it is just the principal which is created and not the requisite interest required to retire the debt. This leads to ever more debt and has led several writers to suggest the image of either a debtor or the entire society on a treadmill or hamster's wheel of endless debt slavery.

Melodramatic or not, the debt to GDP ratios of the USA and UK suggest that something truly wicked this way comes.

Very best of luck to you, and all of us. "Yikes," indeed.

**FRED** · April 11, 2008, 08:35 AM

Re: The CIA shows WHY the British should worry!

Originally posted by gobears View Post

I am a newbie on itulip, and feel like I am drinking from the proverbial fire hose.

Could someone please explain why the US debt to GDP is 88%, while it is often referred to as being over 200%?

We recommend Steve Keen's site. See: Interview with Steve Keen.

**Mega** · April 11, 2008, 09:12 AM

Re: The CIA shows WHY the British should worry!

Fred......Should i be worried?
Mike

**Andreuccio** · April 11, 2008, 09:56 AM

Re: The CIA shows WHY the British should worry!

Originally posted by Mega View Post

Fred......Should i be worried?
Mike

Nah. Look at Fred's Debt to GDP chart. We had nearly as high a debt to GDP ratio in the early 30's, and that decade went just fine for us.

**c1ue** · April 11, 2008, 12:35 PM

Re: The CIA shows WHY the British should worry!

Originally posted by qwerty

Outstanding Brits! But why is Germany so high - because of reunification still? That figure for Italy is surprising.

You hit the nail on the head: reunification. Germany will be paying that for at least a generation. One reason why they have such an export driven economy.

Italy is just plain bathetic.

Originally posted by The Outback Oracle

I am having a bit of trouble understanding these numbers. This must be Gross debt not net debt. I'd be very surprised if either China or Japan owed the rest of the world money!

OO,

Japan's government spends far more than it takes in. Hence the debt.

China also spends as much, if not more, than it earns selling crap. This is what I meant when I said that China is still not self-sufficient in investment capital.

**metalman** · April 11, 2008, 01:11 PM

Re: The CIA shows WHY the British should worry!

Originally posted by FRED View Post

We recommend Steve Keen's site. See: Interview with Steve Keen.

keen is measuring total private+public debt while the cia is looking at public only.

**gobears** · April 11, 2008, 02:28 PM

Re: The CIA shows WHY the British should worry!

Certainly the case that the US is in far too much debt has been very well made. In fact, I have bought into the whole Itulip thesis, and have repositioned my portfolio accordingly. I am also learning as fast as possible about macroeconomics, and read many sights & newspapers daily (FT, WSJ, Financial Sense, etc..) HOWEVER, one thing continuously nags me: It seems hard to get the big picture without looking at the USA situation RELATIVE to other countries. As far as I can tell, almost all countries are saddled with historically high debt, including the big players Japan, Germany, UK, China, etc...

I have never seen an analysis of the worldwide debt/GDP picture for all major players, including a breakdown of private debt, public debt, entitlements, balance of trade, and also who is holding who's debts. What if we did an Itulip style analysis for Japan Inc, Germany Inc, China Inc, etc...? (I found EJ's approach of analyzing USA as a corporation very insightful)

It seems to me, it would be productive to pound on the Itulip investment thesis from various points of view instead of just USA centric?

**western** · April 11, 2008, 02:52 PM

Re: The CIA shows WHY the British should worry!

Originally posted by Mega View Post

I almost threw up when i read this, note that the debt for NOrthern Rock is NOT ramped yet!!!!!
https://www.cia.gov/library/publicat.../2079rank.html
Mike

Is it possible this includes the debt of the international and indigenous finance companies who reside in these countries. Ireland has a population of just over 4 million people how could it be ranked 9th in the world, after recent years of government surplus. Its either that or some seriously impressive reckless spending by the unfancied light weight punching above its weight.

**The Outback Oracle** · April 11, 2008, 08:03 PM

Re: The CIA shows WHY the British should worry!

Originally posted by c1ue View Post

You hit the nail on the head: reunification. Germany will be paying that for at least a generation. One reason why they have such an export driven economy.

Italy is just plain bathetic.

OO,

Japan's government spends far more than it takes in. Hence the debt.

China also spends as much, if not more, than it earns selling crap. This is what I meant when I said that China is still not self-sufficient in investment capital.

G'day C1ue...my problem is trying to understand what is being measured and my take on this is that everyone in here is talking about a different sort of debt. The piece published by Mike lists "debt-external" which I take to mean money we owe to other nations or groups (net). It is not possible for the whole world to ne negative unless we are borrowing from Mars!
I do understand that money is being created everywhere, creating debt in the process (or vice versa i don't care much) so if anyone can clarify what we are all talking about I would be grateful.
I hope I don't sound too daft!
My memory tells me the Australian debt listed there is some $785 Billion. Out CAD's for the last 38 years total $685 Billion (net)(probably understated by about 50 - 100% if you do a bit of simple compounding -which i haven't done) so it sort of ties together as being the money we owe to groups outside Austtralia as a result of over-spending in one form or another .
I'll post the maths on the compounding a bit later when I get around to it. It will be interesting.
Cheers

**qwerty** · April 12, 2008, 12:37 AM

Yes, that figure isn't net government debt

At least I don't think so. I think it is including one side of the national investment portfolio.

Look at this page http://www.statistics.gov.uk/imf/

See section on 'international investment position"

There is also a link to a spreadsheet on external debt
http://www.statistics.gov.uk/downloa...xtQ1_Q4_06.xls
But I don't have Excel on the machine I'm using right now.
I'll look at it in the morning unless someone gets to it first.

**metalman** · April 12, 2008, 08:14 AM

Re: Yes, that figure isn't net government debt

Originally posted by qwerty View Post

At least I don't think so. I think it is including one side of the national investment portfolio.

Look at this page http://www.statistics.gov.uk/imf/

See section on 'international investment position"

There is also a link to a spreadsheet on external debt
http://www.statistics.gov.uk/downloa...xtQ1_Q4_06.xls
But I don't have Excel on the machine I'm using right now.
I'll look at it in the morning unless someone gets to it first.

says uk gross external debt position end of 2006 is 4,707 billion. includes government, monetary, banks, other sectors. econstats says uk gdp for 2006 was 2,400 billion. that means gross debt/gdp was 196% end of 2006, right?