USAdebt $12.3 Trillion
GDP $14 Trillion
Annual Budget Deficit:
$1.54 Trillion
Debt as % of GDP 80%
Debt as % of GDP 80%
India
debt $696 Billion
GDP $1.2 Trillion
Annual Budget Deficit $96 Billion
Debt as % of GDP 56%
China
debt $600 Billion
GDP $4 Trillion
Annual Budget Deficit $80 Billion
Debt as % of GDP 15%
Greece
Debt $332 Billion
GDP $343 Billion
Annual Budget Deficit $41 Billion
Deficit as % of GDP 97 %
Country debt can make or break any country. In 2002 Argentina defaulted on $90 billion external debt payments. This resulted in economic isolation of Argentina by bond holders and IMF. The currency (Peso) got devalued 75% making essential imports out of reach. It took 4 years for the country to stabilize and still struggling to have balanced budgets and clear off debt.
World economy is like living in a community of different families. Imagine a street with diverse neighbors. The street has a small community bank IMF.
One guy Mr. Greece makes 34k but has 35k credit card loans. Do you think this family will fall apart or since he lives in EU apartment complex, other rich flat owners will rescue him. do you thing whole apartment complex will lose its realestate value because of few flat owners living beyond means. Look at the chart above
How about wealthy neighbor Sam who is powerful and everyone in the street somehow linked in business with him. He makes around 1.4 mil p.a more than anyone on the street but also has equal amount of debt. He continues to make loans every year 10% of his pay. People are lining up to lend him. Do you think one day people stop lending him if he continues to live beyond his means. What happens to the debt he owes to the complete community.
What about the neighbor who used to be poor few years ago and now is on par with anyone. Currently he makes 400k and has just 60K debt. He is only one who saves money annually to lend it to others specially Sam.
What about Mr. India who has only 120k pay and has 60K loan. every year he adds 10k to his debt. Do you think he will soon work harder and pay off his loan and takes care of his big family
He has 10 children and 2 of them barely affording meals. 3 children cannot even read. Other 5 kids are doing fine with stable jobs and are recently able to afford new comforts like cars, T Vs, cell phones.
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