How Bad is the US Debt Problem?

Do you have any idea how bad the US debt problem is?  Does it matter at all?  I had those exact same questions so I set out to do a little research to try to figure this out and satisfy my curious little brain. This paper is the result of that search.

Many of you may know that a countries debt is measured in a ratio that compares current national debt to the Gross Domestic Product (GDP). We know from Wiki that GDP, ”refers to the market value of all officially recognized final goods and services produced within a country in a given period.”

So what is a normal Debt-to-GDP ratio?  How about if we ask the question a slightly different way? What are the ratios of the countries that have terrible debt problems?  These may be a bit easier to find and easier to understand.

So the first thing I did was look for a list of the countries with the worst debt. This is a list of the 15 worst Debt-to-GDP countries .

  1. Japan - They had terrible debt since the burst of their real estate bubble. The
    tsunami just made it worse.
  2. Saint Kitts and Nevis
  3. Lebanon
  4. Zimbabwe
  5. Greece – They are in the mist of their crisis.
  6. Iceland – Thye have already had a huge crisis.
  7. Jamaica
  8. Italy
  9. Singapore
  10. Belgium
  11. Ireland – They already had a huge debt crisis.
  12. Sudan
  13. Sri Lanka
  14. France
  15. Portugal

Japan was a surprise for me initially.  I know their economy has been terrible for almost a generation now but this bad? Not only had their huge real estate bubble devastated them but also add the recent devastating tsunami and you have a complete economic disaster on
your hands.  One may wonder if they will ever recover.

Many of the countries in the top 15 list are no surprise at all. They are either a banana republic or they are countries that have been experiencing civil war for a generation or more.

There are some that have been in the news for either going completely bankrupt and defaulting on bond payments like Iceland and Ireland and Greece is currently going through their civil unrest due to some of the austerity measures being put in place to attempt to stave off defaulting on their debt.

So let’s take a look at some of the more interesting countries that might be a better comparison to the United States.

Greece Debt/GDP Chart

Greece Debt-to-GDP Chart

http://www.economicsinpictures.com/2011/09/greek-debtgdp-only-22-in-1980.html

It is somewhere over 143% now.

Italy Debt/GDP Chart

Italy Debt-to-GDP Charthttp://www.tradingeconomics.com/italy/general-government-net-debt-in-percent-of-gdp-imf-data.html

Italy is sitting above 120%

Belgium Debt/GDP Chart

Belgium Debt-to-GDP Chart target="_blank" href="http://www.tradingeconomics.com/belgium/central-government-debt-total-percent-of-gdp-wb-data.html">http://www.tradingeconomics.com/belgium/central-government-debt-total-percent-of-gdp-wb-data.html

Belgium at 92%

France Debt/GDP Chart

France Debt-to_GDP Chart

http://www.tradingeconomics.com/france/general-government-net-debt-in-percent-of-gdp-imf-data.html

France is above 82%

Portugal Debt/GDP Chart

Portugal Debt-to-GDP Chart

http://www.indexmundi.com/portugal/public_debt.html

http://www.telegraph.co.uk/finance/financialcrisis/8404350/Portugals-economy-in-graphs.html?image=1

Portugal seems to be above 77%

Spain Debt/GDP Chart

Spain Debt-to-GDP Chart

http://research.stlouisfed.org/fred2/graph/?g=3t8

Latest numbers for Spain that I could find have the debt above 47%.

US Debt/GDP Chart

So what is the damage for the US?  We have heard of all the dire predictions
from the PIGS (Portugal, Italy, Greece and Spain) of Europe so surely the US
has to be so much better off, right?

Take a look at this chart. http://dailybail.com/home/chart-us-debt-to-gdp-1940-2015.html

US Debt-to-GDP Chart

This is incredible!!!
Why are people not yelling this in the streets?  I have heard the arguments from TV talking
heads and “Smart Analysts” that America is so much stronger than all those
other countries and that this huge dept is not a problem for us.  Excuse my French, but I believe that is complete crap.

Do you remember during the .com bubble, when all the “smart” analysts were saying that “the rules of investing have changed permanently”?  They went on to day that “We do not have to value stocks the way we used to do it.” Well 2008 has proven them wrong and when the markets stop taking our IOUs and interest rates go through the roof these same “Smart Analysts” will be wrong again.

Conclusion

So the take away for this article is, what are you doing to
protect yourself and your family for when that day or reckoning comes?   I am not going to tell you how to do it, but
I would encourage you to start preparing for that day.  Prepare for the days of hyper inflation.

 

Footnote:

This chart shows total of several different countries.  This is mind blowing.

http://www.gfmag.com/tools/global-database/economic-data/10403-total-debt-to-gdp.html#axzz1qAHbC9LN

waynem

About waynem

As a Minnesota based photographer and artist I have been greatly influenced by the Upper Midwest. I focus my skills and energies on portraits, landscapes, cityscapes, architectural and fine art work. My best work comes from images first painted in my mind. I mull over a prospective image for weeks or months, seeing it from different angles and perspectives, then finally deciding what to capture. The result is images that deeply touch people's emotions and powerfully evoke memories and dreams. My images are used commercially by companies and organizations ranging from Financial Services firms, mom and pop Ice Cream shops and The Basilica of St Mary to communicate their shared vision and values. Book and magazine publishers have featured my images on their covers. My photographs also grace and enhance the decor of many fine homes.
This entry was posted in Business/Marketing, Cultural Commentary, Current Affairs, Investing, Wisdom and tagged , , , , , , , , , , , . Bookmark the permalink.

2 Responses to How Bad is the US Debt Problem?

  1. SMEDLEY says:

    The elected officials of this country are stupid, drunk, blind and a–kissers of the Fed. Or should we say the rip off money printers who have an illusionary hold on us all because the dollar is worthless, let these satan worshipers have their worthless money printer let them have it we can do something else, . our debt is not repayable, we cant pay it back, shoot these dumb bastards just like they did kennedy. what are we waiting for, assassinate the entire Fed. board, arrest the Rockefellers, morgans chases and rothchilds, lock em up then torture them and let them die. you have to understand, its coming folks, atms stop working, banks close, riots, you think im crazy, just look at Greece, and Egypt, and Italy, our idiot congress thinks these crooks have a place at their table for them and they do not, then comes martial law and then a big human kill off or culling, and the new world order is in full swing. DC sucks, politicians suck. law enforcement sucks, and we have been taking it where the sun don’t shine. not me I have had enough, may 16th you will see. we have to march on DC as WE THE PEOPLE and take it back. they cant arrest and shoot us all. these worthless pieces of s–t aint got my nuts I can tell you that. WAKE UP AMERICA AND LETS GO KICK SOME ASS AND FIRE THE CONGRESS, PRESIDENT AND THE ATTORNEY GENERAL SEND PELOSY TO THE FAKE BOOB, DUMB BROAD FARM, START OVER AND GET BACK ON TRACK, OR ARE WE TOO SCARED AND LAZY

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Spam protection by WP Captcha-Free