World governments have borrowed massive amounts of money to live beyond their means. Above is a graphic showing the world's largest economies, how much debt they borrowed and the interest payment due relative to their GDP. The tab is piling up...
Bloomberg: World’s Biggest Economies Face $7.6 Trillion Bond Tab as Rally Seen Fading
How the debt eventually piles up?
Now let's visualise how major countries debts are piled up compared to the size of national landmarks...
The number of red pallets represent government repayments due in 2012; yellow equates to the outstanding debt after the 2012 repayments; the trucks represent the 2012 interest payments due on the total debt piles
Hat-tip to Demonocracy.info
India
It has racked up a debt of 74% of the economy in 2011, which is more than the 60% debt to economy ratio set by EU for economic stability standard.
China
The debt pile seems rather scary for China but the size of its economy and population is not to be underestimated. The debt only accounts for ~17.5% of the economy.
China has the world's second largest economy, overtaking Japan in 2011, it is still experiencing economic growth and has the biggest foreign exchange reserves in the world at US$ 3,200 billion.
The bigger the foreign exchange reserves, the more power the country has to influence the value of its own currency.
The greater a country's foreign reserves, the better position it is in to defend itself from speculative attacks on the domestic currency.
It is also accumulating gold bullion aggressively in 2011 to diversify its "paper" reserves.
Japan
Fukushima Power Plant compared to the trucks is GIGANTIC.
Japan is a unique example. It holds a MASSIVE 228% debt to economy ratio. This is only possible because of loyalty of Japanese people to the Japanese government. Japan's people are the main buyers of Japanese government debt, and as long as they blindly buy the debt, and interest rates don't go up, they can practically run up the debt indefinitely. The issues start when everyone starts wondering how they will get the money back.
While historically having a good export surplus; Japan still has two "lost decades", where it has experienced no economic growth. This is mainly due to the large amounts of debt.
United States
USA's total debt, including personal debt, real estate (mortgage) debt, consumer debt, credit card debt and government debt totals a mega US$ 47,992bn, roughly 2,400 trucks full of money. That's the huge wall at the back in the graphic. Source: US Debt Clock
USA borrowed US$ 1,229 billion in 2011 - roughly 2.5x towers of cash in the background. USA runs a mega ~35% budget deficit, far above the 3% max limit set by EU for economic stability standard.
With industrialized world economies in crisis, USA faces little problem to finance its budget deficit in 2012 since world's money is currently flowing into USA in great numbers as investors try to find "safety" where to store their money, since Europe is not safe; neither are banks.
As long as USA has access to cheap credit due to scared investors willing to hand over their money in name of "safety", USA's interest payments will remain far below normal. Much depends on it retaining its AA+ credit rating and the US dollar's status as a world reserve currency.
Canada
In 2012 Canada must re-pay and/or re-finance a significant portion of its debt. It must refinance 42% of its debt, but since the country carries as AAA credit rating as of Jan. 2012 it faces little challenge to re-finance its debt.
Brazil
The economy is rated at US$ 2,517 billion.
With a 4.7% unemployment in 2011 and an export surplus it it is doing rather well.
United Kingdom
As of Jan 2012, UK holds a AAA credit rating but has a staggering Gross External Debt of US$8,981 billion(not shown).
The private sector of UK (people, business', etc) are highly indebted, only surpassed by USA. High debt slows economic growth and it is reflected in the slow 0.9% growth of economy in 2011, which is much lower than the 4.2% inflation - meaning people of UK are becoming more poor as of 2011/2012.
France
Their credit rating was downgraded from AAA to AA+ recently and hold a 83.5% (2011) debt to economy ratio, above the 60% set by EU for economic stability standard.
French banks are also among the financially weak banks that pose a danger to the French economy.
Italy
It has a debt ratio of 118.1% (2010) to economy, far above the 60% limit set by EU for stability. Italy faces a GIANT re-payment / re-finance of US$ 428 billion of its debt in 2012, with strong fear that it will have problems finding lenders/investors that want to lend the weak country money.
Credit rating agencies say the outlook for Italy is negative, which means their credit rating will be down-graded in the future, as the debt takes serious toll on the economy and try struggle to pay back their debt.
This will further scare lenders / investors away and force the interest rates up - amount of trucks full of cash of tax-payer money sent to investors / banks / lenders.
Germany
Germany holds a ~80% debt ratio to economy, above the 60% limit standard set by EU for stability, while being mad at Greece and PIIGS for doing the same.
Germany faces a US$ 285 billion repayment/refinance of debt in 2012 but sees no problem of finding lenders, since Germany's economy looks great compared to the rest of the industrialized world.
Russia
Russia compared to its large economy holds barely any government debt - only 2.5% of economy (GDP).
Russia's Government benefits from large export surplus to pay for government's expenses.
The export surplus comes mainly from exporting natural resources, including natural gas and oil.
