Friday, 20 May 2011

Top 6 National External Debts

Sovereign debt as a % of GDP can be misleading. GDP can be misleading; it does not distinguish consumerism from production. So nations with a high GDP but with a primarily import economy may have a harder time paying off their sovereign debt. And so here are the top 6 countries when it comes to external debt.

Now a word of warning, this list is equally misleading, because it does not take into account debts owed to the country in question nor overseas assets and it includes private debt as well. So it is more of an analysis of the economy of the country as a whole in terms of production vs consumption.

6. Japan

I was going to make this another top 5 but when I saw number 6 on the list I couldn't help myself. The cause of their $2,246,000,000,000 USD debt is the same reason for its public debt, their boomer generation has grown old and now consumes much more than they produce.

5. Netherlands

I have no idea why Netherlands is on this list with a debt of $2,344,296,360,000 USD. I did a little bit of digging and the Dutch economy is strong, in fact they have a trade surplus. Each year their exports earn a lot more than their imports. That said the Netherlands does have a nice hefty 62.7% public debt by GDP but this is less than half a trillion dollars. It could be explained by the trade side of their economy. Typically trade economies have a large amount of both creditors and debtors and this may have skewed the figures.

4. France

With the second largest economy in Europe, France is number 4 on the list with a debt of $4,698,000,000,000 USD. While France does have a large economy, it has has a large trade deficit. French imports exceed exports and let's not forget their whopping large public debt (~1.6trillion USD)

3. Germany

 Germany has the largest economy in Europe and has an even bigger external debt than France. Like the Netherlands, it is puzzling to see Germany on this list because Germany has a marginal trade surplus. Some of this is undoubtedly due to Germany's large public debt of approximately ~2.5 trillion USD. Germany's external debt is $4,713,000,000,000USD

 2. United Kingdom

 In second place with an external debt of $8,981,000,000,000USD is mother England. So how did the UK claim it's rightful place as number two? Britain had it's hey-day back in the colonial era where it made a tonne of cash by exploiting the colonies and this got even more lucrative with the industrial revolution. One particularly large trade triangle was between Africa and the US. Slaves were shipped over to America from Africa by British trading ships and then the US would ship basic foodstuffs and raw materials to Britain who would then make manufactured goods and ship it back to America.

Unfortunately for Britain, after the American Civil War, the US had its own manufacturing industry and it was booming. Britain could not compete with it.

Another source of income for Britain was colonial debt. When England colonized places like Australia they gave the colony the bill to pay for their big investment in colonizing the place. The colonies have been paying off their debt since.

In World War 2 though, Britain borrowed a lot of money from the US to keep their war effort going. After the war, the US used this debt to pressure. England into giving up her precious colonies. Ever since, the UK has been an import economy and has been racking up debt.

And the WINNER is..................................

1. The United States of America. That's right, The US is still number one when it comes to gross debt. Back in September 2010 the US debt ascertained the lofty height of $14,392,451,000,000 and it is only growing larger. Why is it so high? Partially because of it's public debt but also due to it's economy as a whole. The US, like the UK, had it's peak but now its manufacturing industries have long since died to the Asian markets. The US is now an import economy and is losing money. Remember how I said in my last post that the US could pay off it's debt? I take that back. How do you pay off a debt when the nation's GDP is all imports?

So to my American audience, be proud. You are still number one!


  1. Glad you cleared this up for me.

  2. awww yeah, canada keeping it real

  3. Wahey I thought the UK'd be up there. Makes me proud knowing we spend our money on bailing out other countries instead of spending it at home.

  4. I wish Britain still had their colonies :(

  5. Nice post, check out my new blog!

  6. not surprised that USA won

  7. That debt is so astronomically high that it practically means nothing since we will never pay it off.

  8. Debt? What's debt? Debt is kind of an illusion anyway, just keep spending guys! That's Keynesian, right?

  9. Now number 1 isn't surprising at all. Thanks for clearing it up though!

  10. that is alot of money...

  11. Oh man I've been looking into this earlier. It almost seems impossible to even BE in the sort of debt America is. I remember there being a few small countries which were like tax and debt havens. I'd rather live in those.

  12. You probably think I'm creepy because I'm fast on my way to being the most frequent commenter on your blog, but....

    I was bored and I decided to read your old posts. (And you know, steal your opinions to impress my harem of attractive and nerdy guys. JUST KIDDING. Jessica does not stoop so low.)

    But yeah, I realized I DIDN'T FOLLOW YOUR BLOG.

    That's freaky, because I WAS ABSOLUTELY SURE I DID. :O

    Rest assured, I have corrected that mistake.

    AND WHOOOOOHOOO for America. In addition to having the highest obesity rates, you're also most heavily (hee hee) in debt.