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Lumping the US and UK together in the context of debt/gdp is misleading. The UK does, as the article suggests, have a nearly 400% debt/gdp ratio, but the US is

Lumping the US and UK together in the context of debt/gdp is misleading. The UK does, as the article suggests, have a nearly 400% debt/gdp ratio, but the US is "only" 95% debt/gdp.

ahi 17y ago
I think, but don't know, that that 95% is federal only. Load in state and local governments and the US might be competitive with the UK.
- ovi256 17y ago
  Plus the Medicare and Social security financing debt, which, in a beautiful coup of financial engineering, is counted separately.
- btilly 17y ago
  The biggest component to US debt is private. Let me find some figures. Googling for us "total debt" private leads me to http://mwhodges.home.att.net/nat-debt/debt-nat.htm http://mwhodges.home.att.net/nat-debt/debt-nat.htm which claims a total US debt of $57 trillion. The site is sensationalistic, but I have no reason to doubt their numbers. Almost certainly they are going off of recognized published numbers from somewhere. That figure includes "all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors, including federal debt to trust funds". It does NOT include unfunded obligations like pensions and social security. Wikipedia tells me that the US GDP is 14.2 trillion. Dividing one number into the other gives me a 401.4% debt/GDP level for the USA. And since we only have the first number to 2 significant digits, we should round that to 400%. Whether or not you agree with the conclusions in the email, the numbers quoted look accurate.
adamt 17y ago
Uk government debt as a proportion if GDP is more like 55% http://www.statistics.gov.uk/cci/nugget.asp?ID=277 http://www.statistics.gov.uk/cci/nugget.asp?ID=277 The author if the original piece seems to have several key stats wrong which undermines his arguments.
- btilly 17y ago
  The author of the original piece said total debt, not government debt. Total means total, and includes things like all of those mortgages out there (many of which are under water). Looking at http://en.wikipedia.org/wiki/List_of_countries_by_external_debt http://en.wikipedia.org/wiki/List_of_countries_by_external_d... I see that UK debt to the rest of the world is 365.44% of total GDP. It is not hard to believe that the internal debt within the UK to (meaning debt held by people, organizations, etc within the UK to itself) would be somewhere north of 35%. That would make the total UK debt over 400%. In another response I've pointed out that the total US debt is almost exactly 400%, so that quoted figure looks correct. The interpretation may be an entirely different thing.
fauigerzigerk 17y ago
It's a little difficult to pin down the numbers right now because everything has changed so much in the last year. But 95% vs 400% is definately utter nonsense. This IMF paper (http://www.imf.org/external/pubs/ft/spn/2009/spn0925.pdf http://www.imf.org/external/pubs/ft/spn/2009/spn0925.pdf page 35) from Nov 2009 projects US and UK government dept for 2010 to be 94% and 82% of GDP respectively. The US and the UK, in spite of the many differences, have one important thing in common. In both cases debt is almost exclusively denominated in domestic currency. So neither of the two can default outright as long as there is enough energy left to start the printing presses. Any default would come in the shape of inflation.
- BearOfNH 17y ago
  as long as there is enough energy left to start the printing presses Intuitively this makes sense but in reality it is not practical. As soon as investors hear the presses crank up (metaphorically speaking) they can predict what's coming and will dump all their US debt, driving up interest rates and forcing a deep[-er] US recession. Politics will then correct this before the USA becomes Northern Zimbabwe.
  - fauigerzigerk 17y ago
    I'm not worried about the US becoming Zimbabwe at all (northern or otherwise). But under extreme circumstances, when the alternatives are to default outright or to inflate the debt away, the latter will always be preferrable for a country indebted in its own currency. It's not an option for other countries, so I think it's a useful distinction in spite of the issues you correctly point out.
- btilly 17y ago
  After you figure out the difference between total debt and government debt, you can look for my other comments that show that the quoted 400% figure is indeed reasonable.
  - fauigerzigerk 17y ago
    The figures are apples and oranges. I have no doubt that you can get to a reasonable number of 400% for some form of debt. But if you do that you need to do something similar for all countries you compare.

Lumping the US and UK together in the context of debt/gdp is misleading. The UK does, as the article suggests, have a nearly 400% debt/gdp ratio, but the US is "only" 95% debt/gdp.

ahi 17y ago

I think, but don't know, that that 95% is federal only. Load in state and local governments and the US might be competitive with the UK.

ovi256 17y ago
Plus the Medicare and Social security financing debt, which, in a beautiful coup of financial engineering, is counted separately.
btilly 17y ago
The biggest component to US debt is private. Let me find some figures. Googling for us "total debt" private leads me to http://mwhodges.home.att.net/nat-debt/debt-nat.htm http://mwhodges.home.att.net/nat-debt/debt-nat.htm which claims a total US debt of $57 trillion. The site is sensationalistic, but I have no reason to doubt their numbers. Almost certainly they are going off of recognized published numbers from somewhere. That figure includes "all recognized debt of federal, state & local governments, international, private households, business and domestic financial sectors, including federal debt to trust funds". It does NOT include unfunded obligations like pensions and social security. Wikipedia tells me that the US GDP is 14.2 trillion. Dividing one number into the other gives me a 401.4% debt/GDP level for the USA. And since we only have the first number to 2 significant digits, we should round that to 400%. Whether or not you agree with the conclusions in the email, the numbers quoted look accurate.

adamt 17y ago

Uk government debt as a proportion if GDP is more like 55% http://www.statistics.gov.uk/cci/nugget.asp?ID=277 http://www.statistics.gov.uk/cci/nugget.asp?ID=277 The author if the original piece seems to have several key stats wrong which undermines his arguments.

btilly 17y ago
The author of the original piece said total debt, not government debt. Total means total, and includes things like all of those mortgages out there (many of which are under water). Looking at http://en.wikipedia.org/wiki/List_of_countries_by_external_debt http://en.wikipedia.org/wiki/List_of_countries_by_external_d... I see that UK debt to the rest of the world is 365.44% of total GDP. It is not hard to believe that the internal debt within the UK to (meaning debt held by people, organizations, etc within the UK to itself) would be somewhere north of 35%. That would make the total UK debt over 400%. In another response I've pointed out that the total US debt is almost exactly 400%, so that quoted figure looks correct. The interpretation may be an entirely different thing.

fauigerzigerk 17y ago

It's a little difficult to pin down the numbers right now because everything has changed so much in the last year. But 95% vs 400% is definately utter nonsense. This IMF paper (http://www.imf.org/external/pubs/ft/spn/2009/spn0925.pdf http://www.imf.org/external/pubs/ft/spn/2009/spn0925.pdf page 35) from Nov 2009 projects US and UK government dept for 2010 to be 94% and 82% of GDP respectively. The US and the UK, in spite of the many differences, have one important thing in common. In both cases debt is almost exclusively denominated in domestic currency. So neither of the two can default outright as long as there is enough energy left to start the printing presses. Any default would come in the shape of inflation.

BearOfNH 17y ago
as long as there is enough energy left to start the printing presses Intuitively this makes sense but in reality it is not practical. As soon as investors hear the presses crank up (metaphorically speaking) they can predict what's coming and will dump all their US debt, driving up interest rates and forcing a deep[-er] US recession. Politics will then correct this before the USA becomes Northern Zimbabwe.
- fauigerzigerk 17y ago
  I'm not worried about the US becoming Zimbabwe at all (northern or otherwise). But under extreme circumstances, when the alternatives are to default outright or to inflate the debt away, the latter will always be preferrable for a country indebted in its own currency. It's not an option for other countries, so I think it's a useful distinction in spite of the issues you correctly point out.
btilly 17y ago
After you figure out the difference between total debt and government debt, you can look for my other comments that show that the quoted 400% figure is indeed reasonable.
- fauigerzigerk 17y ago
  The figures are apples and oranges. I have no doubt that you can get to a reasonable number of 400% for some form of debt. But if you do that you need to do something similar for all countries you compare.