Sovereign Risk Chart - Where Would the US Fit in, on Europe's Scale?

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locklimitdown's picture
locklimitdown
Status: Bronze Member (Offline)
Joined: Mar 15 2008
Posts: 46
Sovereign Risk Chart - Where Would the US Fit in, on Europe's Scale?
Mainstream media has been obsessed with the PIGS mounting debt problems as of late, keeping everyones eye off the ball resulting in a "FLIGHT TO SAFETY" the US dollar while the PAPER precious metals have been torched. The disconnect is appalling. One day soon we will all be waking up to a very different world as POR strikes
 
The worst place for your dollars is in dollars.
 
 
 
 
 
 
 
Friday, February 5, 2010
A very nice chart via FT Alphaville - that cross references fiscal deficit as % of GDP versus total debt divided by GDP for the European nations.  As we often have discussed the P(ortugal)I(reland)I(taly)G(reece),S(pain) - it is nice to see how they stack up, in graphical format.

[click to enlarge]

What I decided to also show above was where the USA would stand if it were a European country - I used a range because if I just used a "dot" someone could come in and criticize the precise placement.  The reality is we are now running a fiscal deficit of 11-13% of GDP, with no end in sight in the near term... and EXCLUDING liabilities of Medicare, Social Security, and now Fannie and Freddie which the taxpayer has unlimited losses on for the next 3 years - we are at about a 80% debt to GDP ratio.  And with the recent increase in the debt ceiling which will take us through the end of 2010, we are on pace to reach 100% by this time next year.  (GDP is a bit over $14 Trillion in the US)

So what does the chart tell us?  The US is a disaster and aside from Greece, we are worse than all the "PIIGS" we are hand wringing about.  I think this is very important for Americans to understand...more

Davos's picture
Davos
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Joined: Sep 17 2008
Posts: 3620
Re: Sovereign Risk Chart - Where Would the US Fit in, on ...

Good chart. Thanks. Something tells me that the 7th largest economy Cal eye for niyaaaay is totally off the chart. Will they go Lehman or get bailed.

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