The world is sinking in a sea of debt

thestar.com/Business/article/576543

Creditors and debtors - most of the world is drowning in debt

Net debt (RED) of the Group of Seven nations expressed in U.S. dollars.

Canada: $266.199 billion ($337.294 billion Canadian)

United States: $7,387.385 billion or $7.39 trillion

United Kingdom: $793.346 billion (£571.764 billion)

France: $1,502.597 billion or $1.5 trillion (1,157.693 billion euros)

Germany: $1,849.523 billion or $1.85 trillion (1,425.374 billion euros)

Italy: $2,130.725 billion or $2.13 trillion (1,642.261 billion euros)

Japan: $5,698.98368 billion or $5.7 trillion (507,599.222 billion yen)

Source: International Monetary Fund

Suddenly the Group of Seven “leading economic nations” doesn’t look so impressive.

I don’t know.

If you expressed their debts as a multiple of GDP/GNP I’m confident Ireland could trump those debts 8DD

The Irish must be world leaders at cynicism.

no need for the ‘must’

we’re the best at that as well 8)

And from here… The other seven deadly bubbles

  1. Subprime Mortgage linked Loans and other Assets (USD 1.5 trillion);

  2. China, India, Eastern Europe and other Emerging Market Loans (USD 5 trillion);

  3. Commodities (Commodity Derivatives at about USD 9 trillion);

  4. Corporate bonds (USD 15 trillion);

  5. Commercial (USD 25 trillion) and Residential property (USD 50 trillion);

  6. Credit Cards Outstanding Debt (USD 2.5 trillion);

  7. Currencies (Foreign Exchange Derivatives at about USD 56 trillion); and

  8. Credit Default Swaps (USD 58 trillion) as a subset of all Derivatives (USD 1,144 Trillion).

Scary figures indeed.

I remember seeing Dave Allen doing stand up (or sit down in his case) once talking about countrys and the debt they owe and him asking the question “Who the f*ck do we all owe it all to though?”.

I still don’t know.

I’ll be corrected quickly if I’m wrong but I’d have thought that it works something like this:

Using the accounting equation:

Assets = Liabilities + Shareholders Funds

Putting it another way : Assets - Liabilities = Shareholders Funds

So for all that debt listed above there are people who own the ‘shareholders funds’.

People own the shareholders funds by having deposited money in banks instead of blowing it on consumption, or they buy shares etc. The banks in turn lend the money out to people who want to buy homes, flat screen tellys and cars. People are then paid to make the cars, tellys, houses etc hence the money multiplier etc etc etc

An important question for a country is how much of the liabilities are owed to its own citizens and how much is owed to foreign citizens. I’d love to know what Ireland’s position is. Is our public and private debt mostly owed to foreign citizens e.g. the Germans?

Who owns Ireland? :open_mouth:

And that’s where the recovery bond comes in. Successful nations are the ones that owe most of their debt to their own citizens.

Any basis for this claim rock3r?

If most of our debt is currently foreign-owned then it’s gonna have to be one huge “recovery bond” sale to get us into the position of the government owing most of its debt to the people.

So just for argument’s sake, let’s say we had the following scenario last September (for convenience forget IILP etc.):

1)Anglo go running to the Brians looking for the guarantee. Brians say no, we’ll just guarantee deposits to 100k.

2)Anglo goes into liquidation. Staff on the dole.

3)Creditors end up owning shopping centers, offices, hotels and ghost estates all over Ireland. Such assets quickly find their clearing price.

4)AIB and BOI get starved of capital. They go bust too. Creditors get even more shopping centers and hotels as liquidator turfs out the bad loans - private sector carnage.

5)Liquidator sells retail branch network and back office systems to Gubberment who also take on the cleaned up loan book. Gubberment injects capital and ensures their retail and branch operations continue.

6)When things are looking up, Gubberment flogs off AIB and BOI for handsome profit. NTMA finally starts to show a profit.

Private sector screwed. Taxpayer protected. Essence of banking sector intact.

Downsides please.

I’d also like to see some evidence to support this. Bearing in mind that most countries can inflate their own currencies, therefore reducing the public debt burden if they owe it in their own currency. Who will borrow in your currency - your own people, right? (unless you’re the worlds reserve currency).

Now consider you don’t control your own currency and cannot gradually inflate away the debt burden which you owe to your own citizens? Who does that sound like?

Therefore I think your statement is better read as:

Successful nations are the ones that owe most of their debt in their own currency - by extension, but of little relevance, probably to their own people.

So who are they all in debt to?
Other countries, or private individuals/companies?

Plenty but nothing like the carnage we’ll see with the current lets-just-do-this-and-hope-it-all-works-out scheme.