American Consequences - November 2017

$63 TRILLION OFWORLD DEBT IN ONE VISUALIZATION I n an ideal situation, governments are just borrowing this money to cover short-term budget deficits or to finance mission critical Together, these five countries together hold 66% of the world’s debt in nominal terms – good for a total of $41.6 trillion. Next, here’s the top five for debt-to-GDP :

projects. However, around the globe, countries have taken to the idea of running constant deficits as the normal course of business, and too much accumulation of debt is not healthy for countries or the global economy as a whole. The U.S. is a prime example of “debt creep” – the country hasn’t posted an annual budget surplus since 2001, when the federal debt was only $6.9 trillion (54% of GDP). Fast forward to today, and the debt has ballooned to roughly $20 trillion (107% of GDP), which is equal to 31.8% of the world’s sovereign debt nominally. THEWORLD DEBT LEADERBOARD This infographic from Visual Capitalist looks at two major measures: (1) Share of global debt as a percentage, and (2) debt-to-GDP. Here’s the top five “leaders” in each category, starting with share of global debt on a nominal basis:

Rank

Country

Debt ($B)

% of Global

Debt-

Debt

t0-GDP

1 2 3 4 5

Japan Greece

$11,813

18.8% 0.6% 0.1% 3.9% 0.4%

239.3% 181.6% 148.7% 132.6% 130.3%

$353

Lebanon

$75

Italy

$2,454

Portugal

$267

While only Italy and Japan here are considered major economies on a global scale, the high debt levels of countries like Greece or Portugal are also important to monitor. Greece, for example, is continuing along a particularly unsustainable path – and external creditors are getting stingier. Most recently, both the IMF and Greece’s euro-area creditors have demanded the country implement a law that automatically introduces austerity measures if a budget surplus of 3.5% of GDP isn’t hit. While Greece has dismissed such demands as “unacceptable”, the country – along with many others around the globe – will have to accept that constant debt accumulation has eventual consequences.

Rank

Country

Debt ($B)

% of Global

Debt-

Debt

t0-GDP

1 2 3 4 5

United States

$19,947 $11,813 $4,976 $2,454 $2,375

31.8% 18.8%

107.1% 239.3% 44.3% 132.6% 96.3%

Japan China

7.9% 3.9% 3.8%

Italy

France

Courtesy of Visual Capitalist . They’re currently putting together their best infographics, charts, and visualizations and connecting themwith one universal theme: what are the fundamental forces shaping the business and investingworld?

Their first-ever, coffee table-style book, Visualizing Change , contains 200 pages of top-notch graphics that tie the worlds of tech, business, and the global economy together... from the “War on Cash” to “The Tech Invasion.” Click here to pre-order your copy .

26 | November 2017

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