Saturday, July 28, 2012

Eurozone Debt 2011

This BBC page from 2011 has a nice interactive graphic of who owes what to whom.  It also contains this:

Country         Foreign Debt/GDP    Govt Debt/GDP
France           235%                    87%
Spain            284%                    67%
Portugal         251%                   106%
Italy            163%                   121%
Ireland         1093%                   109%
Greece           252%                   166%
Japan             50%                   233%
Germany          176%                    83%
UK               436%                    81%
US               101%                   100%

As you can see, for some of these countries, private debt dominates. Take the first row, for example - France. French government debt, even if it was all foreign debt, would still leave private foreign debt to be 235% - 87% = 148% of GDP.

As Krugman pointed out, it was private, not public, borrowing that created the mess in many of these countries.   And when both private and public sectors simultaneously try to reduce debt, the result is an economic recession or depression.

PS: Four year old information from the McKinsey Global Institute, but still useful I think to get a qualitative understanding of what is going on.