Guess Which Country Has Debt Of Nearly 1000% Of Gdp...

[MrFlibble]

A few notes here:

• This chart is looking at all kinds of debt, not just sovereign debt. The UK's staggering debt-to-GDP ratio is largely due to the size of its financial sector.
  
• All financial sector debt is, to some extent, potentially government debt, since all governments end up having to rescue their financial sectors in the event of a crisis. That's what brought down Iceland and Ireland.
  
• And yet, for reasons we explained here, the UK is still seen as a gold-standard among safe-havens.
  
• By no measure does the US look remarkable debt-wise -- even household debt/GDP doesn't look that bad. For that matter, Europe doesn't look that bad either. Their problem is not debt, but fiscal/monetary structure.
  

Read more: http://www.businessinsider.com/g10-countries-by-total-debt-to-gdp-2011-12

Shockingly bad number but not surprising at all.

[tomandlu]

I'd be interested to see game over's take on this chart...

[fluffy666]

I'd be interested to see game over's take on this chart...

Yay! We're Number One!

[Ruffneck]

Most of that UK debt is from the last 5 years.

[_w_]

A few notes here:

• This chart is looking at all kinds of debt, not just sovereign debt. The UK's staggering debt-to-GDP ratio is largely due to the size of its financial sector.

Unfortunately that green debt is the one we guarantee. it might as well be public debt.

[PopGun]

I'd be interested to see game over's take on this chart...

You'll be waiting a while.

Strange how the green one is much bigger then the orange bit.....

[Blue Peter]

Is that net or gross debt, though? I suspect the former,

Peter.

[scrappycocco]

It can't all be bad debt, they must be getting a return on some of it.

[fluffy666]

Unfortunately that green debt is the one we guarantee. it might as well be public debt.

How can we guarantee that? I might was well guarantee a million pound mortgage...

[57percent]

Is that net or gross debt, though? I suspect the former,

Peter.

In the order of £6tr. It will be gross. One side of the balance sheet.

A number that shouldn't be discarded, but not certain it should be added in a graph like this.

If you could include the current NPV or the implied market default risk, that might make some sense.

Also seems to be missing NPV of public sector pensions, which I would include.

[MrFlibble]

Unfortunately that green debt is the one we guarantee. it might as well be public debt.

Probably will be public debt in time as I cannot imagine an end result that doesn't involve the taxpayer owning all the these so called banks.

Still once they're nationalised them and fully transferred all the loses to the taxpayer they can then sell on the profitable parts at a 50% discount just like they did with Northern Rock.

Good game, good game...

[_w_]

How can we guarantee that? I might was well guarantee a million pound mortgage...

Well that's exactly how it is. UK taxpayers implicitly guarantee all of it. They never asked us of course.

Edited December 5, 2011 by _w_

[ska_mna]

Yay! We're Number One!

We've won! We've won!

God save the Queen!

I feel all patriotic!

Lolllll

Edited December 5, 2011 by ska_mna

[interestrateripoff]

Who needs manufacturing when you can have finance.

[MongerOfDoom]

Is that net or gross debt, though? I suspect the former,

Oh no! They forgot to include the value of taxpayer-owned RBS shares ....

The difficulty with using net debt is that assets often don't turn out to be worth the face value, whereas liabilities always will. Seeing as 100% gov debt/gdp is about the limit that can be sustained at the edge of the abyss, and 200% is almost certainly enough to cause a default, the graph gets the meaning across really well. It might not explain precisely how much the country is screwed, but it makes it very clear that the figurative virginity is long gone.

I find it amazing just how well the other basket cases such as the US and Japan look in comparison.

[Blue Peter]

In the order of £6tr. It will be gross. One side of the balance sheet.

A number that shouldn't be discarded, but not certain it should be added in a graph like this.

If you could include the current NPV or the implied market default risk, that might make some sense.

Also seems to be missing NPV of public sector pensions, which I would include.

Ooops yes, meant latter. Cheers,

Peter.

[_w_]

there's a big difference between an implicit guarantee and a guarantee.there is now way a UK govt could backstop the lot.

The government cannot but we can, if we include our children and grandchildren... So chances are, we will. And if we disagree and protest about it the police will make sure we learn that political protests leave a bad taste in our mouths ... and a few broken bones; much better to cower at home and accept our lot. Which will help us on our way to poverty ...

[LiveAndLetBuy]

...

Yeah but the point is the Bank of England has bought lots of the UK's debt so that, like, evens it out. Sort of. I mean we're in debt but then again we're in credit. Right?

[fluffy666]

Oh no! They forgot to include the value of taxpayer-owned RBS shares ....

The difficulty with using net debt is that assets often don't turn out to be worth the face value, whereas liabilities always will. Seeing as 100% gov debt/gdp is about the limit that can be sustained at the edge of the abyss, and 200% is almost certainly enough to cause a default, the graph gets the meaning across really well. It might not explain precisely how much the country is screwed, but it makes it very clear that the figurative virginity is long gone.

I find it amazing just how well the other basket cases such as the US and Japan look in comparison.

It's a direct result of the whole 'We specialize in accounting fraud money laundering Financial Services and we promise not to have any regulations and we won't bother enforcing them anyway' theory of How To Run A 1st World Economy.

[Darkman]

I find it amazing just how well the other basket cases such as the US and Japan look in comparison.

Japan has been the worst financial disaster zone for eons now.

To see us trump them like this now is.... sensational.

[Sir Harold m]

Since when did the uk gov implicitly or explicitly guarantee £6trillion of debt?

I thought the number was restricted to a much smaller proportion of uk banks only. That number presumably includes foreign banks debt that sits on uk legal entity balance sheets . They may be based here but I wasn't aware of the uk gov backstopping them.

Please tell me I'm wrong because if not surely govvy yields would be in the double digits ?

[MongerOfDoom]

Since when did the uk gov implicitly or explicitly guarantee £6trillion of debt?

Wikipedia says RBS assets are £1.4e12, and their liabilities will no doubt be roughly that accounting value. The recovery rate on Lehman's debt is about 20% http://www.ft.com/cms/s/0/79808978-a275-11e0-9760-00144feabdc0.html . I don't know if that would apply to the whole amount, but i) we have already agreed the amounts are net, and ii) anything approaching an 80% loss on £1.4e12 would reliably finish the country off, even before any other bank was involved, which they would.

There is approx another £1e12 in national debt. The household debt is a similar magnitude. While not guaranteed by the government, it will be a choice between paying people not to default, or making the banks whole after they do.

So in rough figures you have the government on the hook for £3.4e12 in debt, of which somewhere in the region of £1e12 to £2.4e12 might be paid by selling mildly distressed assets. And that is just the three main liabilities I could think of. Oh, and a £1e12 worth of debt combined with £1.5e11 of deficit is perfectly sufficient to replicate the PIIGS in just a few years without anything else going wrong. So thank god there isn't a recession coming and there are no problems in the Eurozone.

You could try adding public pensions, exposure to other banks, and maybe one or two minor wars to my estimated figures. Then see if you get something so optimistic as to make a difference between doomed and not doomed. Oh, I think there might also be a slight EFSF liability somewhere in there, and I guess the IMF will ask for money if the country hasn't gone bust or maybe asked for some first. The country is already defaulting on its obligations to savers, so its creditors probably won't be all that far behind.

I would really love to hear an argument that explains why it will all be fine in the end. Anyone?

[BelfastVI]

That shows the UK debts very clearly. As some have pointed out having one of the largest financial sectors in the world will have an impact on these tables.

To work out its true standing you also need to look at what the UK is owed.

Bit like two guys at the bar. One thinks he is wealthier than the other as he has a house worth £400k whilst the other guy has a house worth only £120k. However, the first guy has also a mortgage worth £400 whilst the second guy's mortgage is only worth £70k.

If we set, alongside the debt of each country the amount owed to it, a different picture may appear.

[bendy]

Who needs manufacturing when you can have finance.

Which is exactly why we are still a 'safe haven'. London is the financial system and they still believe that everything is under control.

They might be right, on the other hand we might be.

I guess the difference between them and HPC is that they have a lot more clout when it comes to making themselves 'right'.

[Self Employed Youth]

Who needs manufacturing when you can have finance.

Aren't they selling off the forests?

I'd imagine a forest would be a good investment if paper was in demand, perhaps someone wanted to print a lot of it...