Is the United States the World's Most Indebted Country? Not Even Close

[onebyone]

Sure, there's over $17 trillion in government debt on the books, but America has things under better control than quite a few other countries.

Alex Planes
(TMFBiggles)
Mar 15, 2014 at 3:15PM

The national debt United States is a national nightmare for a fairly large part of the population. There are debt clocks aplenty online, tracking in real time a whole mess of money flowing every which way: how much the country owes, how much it takes back in taxes, how much it spends, how deep the deficit grows, and how much its citizens owe for mortgages, credit cards, and student loans. If we don't balance the budget and get our house in order, it's doom and decay and slavery in a Mad Max sort of world, or something similarly apocalyptic.

THE NATIONAL DEBT CLOCK OUTSIDE THE NEW YORK CITY IRS OFFICE IN 2012.
SOURCE: WIKIMEDIA COMMONS.

But here's the truth: The United States isn't the most indebted country in the world in several ways. Sure, no other country carries as much nominal debt (ours was $17.5 trillion at last count), but our government-held debt-to-GDP ratio is lower than that of several other countries, which includes Japan (leading the world with a 242% debt-to-GDP ratio), Greece (174% debt-to-GDP), Italy (133% debt-to-GDP), and Portugal (125% debt-to-GDP).

That's not the only debt metric on which the United States "underperforms," either. Bloomberg recently put together a comprehensive list of countries with over $100 billion in GDP, ranking them not on the basis of debt-to-GDP but by debt per person. Here, too, the United States finishes behind Japan, but simply ranking countries by per-person debt tells us less than it could, since median per-capita incomes will vary quite a bit from country to country.
How long would the average citizen of these countries have to work -- assuming that apocalyptic Mad Max scenario of total debt slavery comes to pass and no one is allowed to spend anything on themselves -- to pay off their country's national debt? We'll call this the per-capita debt-to-income ratio. Keep in mind that median incomes will be lower than typical salaries because everyone in the world doesn't actually work. Let's take a look at the results, particularly at the most and least indebted countries in the world...

The benchmark
United States: 107% debt-to-GDP ratio, $58,604 debt per person
Median per-capita income of $15,480, 3.8 years of work per person
The United States has a hefty burden, but it's far from the worst on Bloomberg's list. Nine other countries have worse debt burdens on a per-capita debt to income ratio. That's largely because few other countries have higher median per-capita incomes than the United States -- but none of those countries would need to work each citizen for more than 1.9 years to pay off their national debts.

 

[onebyone]

The nightmare scenario
Japan: 242% debt-to-GDP ratio, $99,725 debt per person
Median per-capita income of $10,840, 9.2 years of work per person
Japan has been a debt glutton ever since its stock-and-property bubble burst in 1989. The country's debt-to-GDP ratio was scarcely over 50% in 1980, and its debts rose only modestly to 67% of GDP by 1990. However, Japan's government debt has soared since the mid-'90s, cresting 100% of GDP by 1998 and pushing past 200% of GDP in 2009. Today, Japan has the worst showing of all nations in debt-to-GDP, in debt per capita, and in per-capita debt-to-income ratios.

The only comparable events in history where a large developed country pushed its debt-to-GDP ratio past the 200% threshold were recorded in Britain twice (once from the mid-18th to 19th centuries and once from World War I through the Vietnam era) and in France once (following World War I). The long-run outcomes of these events already appear to be playing out in Japan today as the country gradually diminishes in political and economic might. A rapidly graying population, a far-below-equilibrium fertility rate of just 1.39 (a rate of 2.1 is required for population growth), and a cultural resistance to immigrants all combine to create a nightmare scenario for heavily indebted Japan. The country hasn't exactly imploded, but it's hard to imagine a situation in which Japan can simultaneously pare down its debts while improving its economy.

The long shot
Ireland: 121% debt-to-GDP ratio, $60,356 debt per person
Median per-capita income of $8,048, 7.5 years of work per person
Ireland ranks second among all nations in debt per person (the United States is third), and it places third behind Singapore in terms of per-capita debt-to-income. Ireland's debt-to-GDP ratio has soared since the financial crisis -- it hit a low of 25% in 2008 and is now nearly five times as high. It hasn't helped at all that the country's per-capita GDP plunged after the crisis, from a high of $51,720 in 2008 to just $46,180 last year.

Tough austerity measures have not yet borne fruit for the Emerald Isle, which should be a lesson for any hardcore deficit hawks. However, bond investors now believe that the country is on the right track, as its 10-year bonds recently sold at a yield of just 2.967%, which is barely over the 10-year Treasury rate of 2.66%. The country's attractive tax rates and easygoing business regulation also continue to draw in high-skilled jobs, but not yet at a rate that has pushed the economy back on track. Taxes may have to spike on companies that have for years treated Ireland as a tax haven if the country is to effectively reduce its debt burdens.

The best in class
Saudi Arabia: 3% debt-to-GDP ratio, $687 debt per person
Median per-capita income of $4,762, 0.1 years of work per person
The low end of the per-capita debt-to-income scale is packed with petrostates. Saudi Arabia leads, but just barely -- Iran has just 10% debt-to-GDP and a 0.2 per-capita debt-to-income ratio, while Kuwait is right behind at a per-capita debt-to-income ratio of 0.3. Saudi Arabia and Kuwait are the only nations on our list with a debt-to-GDP ratio of less than 10%, and Iran's ratio 10.4% barely misses the mark.

The lesson here is pretty easy to find: If you find an ocean of oil underneath your country early on (it was discovered in Iran almost a century ago and in Saudi Arabia in 1938), you can write your own meal ticket on the global financial markets. Developed nations like Japan and the United States can't hope to replicate this sort of economy, but it might not be a good idea to try -- oil money has turned Saudi Arabia into a well-lubricated welfare state, as some 40% of the country's under-30 population is unemployed. As the country grows accustomed to its easy prosperity, it could begin to use up too much of its own meal ticket, and a Chatham House research report recently predicted that the Saudis could become oil importers by 2038. As that happens, debts will surely shoot through the roof as the desperate ruling family struggles to keep its citizens placated.

Scroll down for the full list, ranked by per-capita debt to median income ratios.



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Country

Debt Per Person

Debt to GDP

Median Per-Capita Income

Years of Work Needed Per Person (Per-Capita Debt to Median Income)

Japan

$99,725

242.3%

$10,840

9.2

Singapore

$56,980

106.2%

$7,345

7.8

Ireland

$60,356

121%

$8,048

7.5

Italy

$46,757

133.1%

$6,874

6.8

Greece

$38,444

174%

$6,086

6.3

Portugal

$26,770

125.3%

$5,519

4.9

Egypt

$2,949

91.8%

$623

4.7

Belgium

$47,749

101.2%

$10,189

4.7

Spain

$30,031

99.1%

$7,284

4.1

United States

$58,604

107.3%

$15,480

3.8

France

$42,397

94.8%

$12,445

3.4

Brazil

$7,431

69%

$2,247

3.3

Israel

$24,947

69.6%

$7,847

3.2

Austria

$38,621

74.8%

$12,284

3.1

United Kingdom

$38,938

95.3%

$12,399

3.1

Angola

$2,184

35.1%

$720

3.0

Venezuela

$7,033

56.8%

$2,328

3.0

Canada

$45,454

85.6%

$15,181

3.0

Switzerland

$38,639

46.6%

$13,550

2.9

Malaysia

$6,106

57.3%

$2,267

2.7

South Africa

$3,170

44.7%

$1,217

2.6

Netherlands

$37,233

75.6%

$14,450

2.6

Germany

$35,881

78.1%

$14,098

2.5

Hungary

$11,099

80%

$4,493

2.5

Philippines

$1,145

39%

$478

2.4

Slovakia

$10,894

57.5%

$5,455

2.0

Finland

$29,930

59.8%

$15,725

1.9

Morocco

$2,125

63.1%

$1,135

1.9

Mexico

$5,357

45.8%

$2,900

1.8

Norway

$34,910

34.1%

$19,308

1.8

Pakistan

$822

66.6%

$480

1.7

Indonesia

$919

26.8%

$541

1.7

Colombia

$2,576

31.6%

$1,534

1.7

Thailand

$2,977

48.3%

$1,795

1.7

Iraq

$993

14.9%

$617

1.6

Denmark

$28,778

47.8%

$18,262

1.6

India

$946

68.1%

$616

1.5

Turkey

$3,840

34.9%

$2,538

1.5

Hong Kong

$13,261

32%

$9,705

1.4

Sweden

$25,155

42.2%

$18,632

1.4

Argentina

$5,444

45.9%

$4,109

1.3

Taiwan

$8,968

40.8%

$6,882

1.3

Romania

$3,410

38.1%

$2,618

1.3

New Zealand

$15,011

35.9%

$12,147

1.2

Australia

$18,110

29.2%

$15,026

1.2

Czech Republic

$9,413

48.9%

$7,821

1.2

Peru

$1,202

17.1%

$1,077

1.1

Chile

$2,244

13.2%

$2,040

1.1

Kazakhstan

$1,947

13.6%

$1,958

1.0

Vietnam

$1,042

50.5%

$1,124

0.9

China

$1,489

20.9%

$1,786

0.8

https://www.fool.com/investing/gene...ted-states-the-worlds-most-indebted-coun.aspx

 

[waz]

The figure for the UK is wrong.
The UK national debt GDP percentage is 84%.

 

[schoolboy]

External debt of the US is overwhelmingly denominated in their own currency (US Dollars) so it's quite meaningless as a measure of their economy. If necessary the Fed can just print money - a luxury no other country has.

 

[pts_m_h_2016]

The figure for the UK is wrong.
The UK national debt GDP percentage is 84%.

Almost all the data over there is suspect. No need to bother with it. They call themselves fool (fool.com).

 

[Hamartia Antidote]

The figure for the UK is wrong.
The UK national debt GDP percentage is 84%.

Well he is digging up a two year old article. That's what desperately scouring the internet search engines for bad news to post every day gets you.

 

[Mista]

Singapore's debt is actually a pension fund. All borrowings are invested and is thus fully backed by assets. We have budget surpluses every term of the government.

So we do not need to 'work to pay the national debt'. In fact, these 'debts' are earning us investment revenue every year.