Tuesday, May 11, 2010

a world of debt

DESCRIPTIONBenjamin David Hennig, SASI Research Group, University of Sheffield - Click for larger version.

The size of each country represents the total external debt of that nation (using 2010 World Bank estimates). The color of each country, on the other hand, shows the size of national debt relative to the size of each country’s economy. (yep, that whole red ball in the middle is europe)

lets look at how that european debt is entangled, via this NYTimes graphic

Europe's Web of Debt

Banks and governments in these five shaky economies owe each other many billions of euros — converted here to dollars — and have even larger debts to Britain, France and Germany. Arrow widths are proportional to debt amounts. Related Article »

Graphic: Web of Debt

 

the charts below are from George Magnus’ most recent report on the upcoming global structural crisis…according to the UBS senior economic adviser, these reflect the makings of a potential debt-trap in not one, but numerous over extended OECD governments the world over:

click either chart --  here’s the average rate:

he explains:

There is little on offer in the underlying details of most governments’ deficit and debt arithmetic moreover that would suggest these debt ratios are about to peak and then decline to more manageable levels in the period ahead.

Indeed on current policy settings the evidence suggests that debt-to-GDP ratios will continue to climb. The reasons are two-fold and relate to conventional textbook definitions of a ‘debt-trap1’

The first reason is that most governments will still be running a deficit on their cycle-adjusted primary budget balance in 2011 – the budget balance excluding interest payments that would appear if the economy was operating at full capacity.

continue reading…

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