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I agree there is a difference between long-term and short-term debt. Obviously if you don't have money and your payday loan matures (has to be paid) tomorrow th

I agree there is a difference between long-term and short-term debt. Obviously if you don't have money and your payday loan matures (has to be paid) tomorrow that's different from a loan maturing in 30 years -- when you may or may not have money, and when inflation/deflation may have increased or decreased the absolute value of that debt. But the graph in your link makes it look like Greece is less indebted than the Netherlands. As the article states, that's because the market value of Greek debt is low (lower than nominal value). That's because few want to buy it, since many think Greece won't repay its debt. Yes, if Greece defaults on its loans they will go away. But it will have consequences. For example, lending money in the future may be more difficult. More generally, if a country borrows linearly at some point no one will believe in their ability to repay, so market value will trend towards zero. With your measure the indebtedness of a country will go towards zero (along with the market value of its debt) the more it borrows. It doesn't make sense. The debt is still there and defaulting on it will have consequences.

akvadrako 9y ago
> That's because few want to buy it, since many think Greece won't repay its debt. You don't understand - what it means is I would be willing to take on Greece's debt obligations for an immediate financial compensation much less than the face value. It has nothing to do with their creditworthiness. Also, because Greece's debt is actually lower than the Netherlands, or at least it was in 2013, I personally think lending them money would be a great investment and I'm not the only one[1]. It's just not an option for political reasons. [1] http://www.reuters.com/article/eurozone-greece-debt-japonica-idUSL6N0VC3DO20150205 http://www.reuters.com/article/eurozone-greece-debt-japonica...
- Someone 9y ago
  Yes, Dutch debt is higher (€442 billion versus 321, according to http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=teina225 http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=t...), but the economy of the Netherlands is almost 4 times the size of that of Greece (770 billion USD vs 195, according to https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(nominal) https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...), and I don't see a huge difference in growth potential between the countries.
  - akvadrako 9y ago
    Obviously, I meant debt/GDP ratio.
    - sandstrom 9y ago
      In 2013 Greece had 177% debt/GDP and the Dutch (Netherlands) had 68%. http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l...
      - akvadrako 9y ago
        It seems I have to repeat myself, but let me try again. I think you're missing the whole point of IPSAS - "real debt" isn't the absolute number owed at some point in the future. If I owe you $1B, due a zillion years from now, I'm not really in debt $1B. The only reasonable way to measure debt is based on it's market value. That's because someone would be willing to trade that debt with me for owing about $1 a year from now. They are equivalent.
- winstonewert 9y ago
  Do you have a reference that actually explains the method IPSAS uses to calculate the debt? Everything I'v seen gives a vauge description.
  - akvadrako 9y ago
    It would indeed be interesting if somebody would write a nice layman's description, but I haven't found one. Here are the official rules: http://www.ifac.org/system/files/publications/files/B5%20IPSAS_29.pdf http://www.ifac.org/system/files/publications/files/B5%20IPS...
- winstonewert 9y ago
  If I'm understanding you correctly, you're not saying its the market value to become a creditor of greece (which would depend on the creditworthiness of greece). Its the market value that you would have to be paid to be willing to become the debtor in place of greece. Am I right?
  - akvadrako 9y ago
    That's how I think of it. So according to IPSAS accounting in 2013, Greece's debt is 18% of GDP. If they could raise that much money, they could be debt free, assuming political will.
    - sandstrom 9y ago
      I agree with this (though not some of the earlier things, e.g. that Greece is less indebted than the Netherlands). Two observations: 1. If they started buying their own debt back en-masse the price would probably go up (as with any other good where demand increases). 2. The problem of Greece, and other poor countries, is that they have trouble mustering resources. Raising 18% of GDP from a poor population isn't that easy. If Greece was a wealthy country they probably wouldn't have the debt they have.

akvadrako 9y ago

> That's because few want to buy it, since many think Greece won't repay its debt. You don't understand - what it means is I would be willing to take on Greece's debt obligations for an immediate financial compensation much less than the face value. It has nothing to do with their creditworthiness. Also, because Greece's debt is actually lower than the Netherlands, or at least it was in 2013, I personally think lending them money would be a great investment and I'm not the only one[1]. It's just not an option for political reasons. [1] http://www.reuters.com/article/eurozone-greece-debt-japonica-idUSL6N0VC3DO20150205 http://www.reuters.com/article/eurozone-greece-debt-japonica...

Someone 9y ago
Yes, Dutch debt is higher (€442 billion versus 321, according to http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=table&plugin=1&pcode=teina225 http://ec.europa.eu/eurostat/tgm/refreshTableAction.do?tab=t...), but the economy of the Netherlands is almost 4 times the size of that of Greece (770 billion USD vs 195, according to https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Europe_by_GDP_(nominal) https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...), and I don't see a huge difference in growth potential between the countries.
- akvadrako 9y ago
  Obviously, I meant debt/GDP ratio.
  - sandstrom 9y ago
    In 2013 Greece had 177% debt/GDP and the Dutch (Netherlands) had 68%. http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 http://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&l...
    - akvadrako 9y ago
      It seems I have to repeat myself, but let me try again. I think you're missing the whole point of IPSAS - "real debt" isn't the absolute number owed at some point in the future. If I owe you $1B, due a zillion years from now, I'm not really in debt $1B. The only reasonable way to measure debt is based on it's market value. That's because someone would be willing to trade that debt with me for owing about $1 a year from now. They are equivalent.
winstonewert 9y ago
Do you have a reference that actually explains the method IPSAS uses to calculate the debt? Everything I'v seen gives a vauge description.
- akvadrako 9y ago
  It would indeed be interesting if somebody would write a nice layman's description, but I haven't found one. Here are the official rules: http://www.ifac.org/system/files/publications/files/B5%20IPSAS_29.pdf http://www.ifac.org/system/files/publications/files/B5%20IPS...
winstonewert 9y ago
If I'm understanding you correctly, you're not saying its the market value to become a creditor of greece (which would depend on the creditworthiness of greece). Its the market value that you would have to be paid to be willing to become the debtor in place of greece. Am I right?
- akvadrako 9y ago
  That's how I think of it. So according to IPSAS accounting in 2013, Greece's debt is 18% of GDP. If they could raise that much money, they could be debt free, assuming political will.
  - sandstrom 9y ago
    I agree with this (though not some of the earlier things, e.g. that Greece is less indebted than the Netherlands). Two observations: 1. If they started buying their own debt back en-masse the price would probably go up (as with any other good where demand increases). 2. The problem of Greece, and other poor countries, is that they have trouble mustering resources. Raising 18% of GDP from a poor population isn't that easy. If Greece was a wealthy country they probably wouldn't have the debt they have.