ce399 | research archive: (anti)fascism

US Debt is well over 500 per cent of GDP (FT 20/4/11)

Posted in Uncategorized by ce399 on 22/04/2011

S&P’s action either means politicians in Washington will move to resolve budget differences, or the first shot has been fired for the eventual downgrade of the world’s largest economy and debtor nation.

The heavily-indebted US will have a deficit of 10.8 per cent of gross domestic product during 2011, according to the International Monetary Fund, and net government debt will exceed 70 per cent of gross domestic product, worse than some troubled European countries.

But some point out that on some financial metrics the US is already far below other triple A rated countries. “The market broadly knows that the US is not triple A and has not been for a very long time,” says Rob Arnott of Research Affiliates.

He argues that using corporate accounting methods, and capturing the full measure of state and local debts, government sponsored entities, social security, medicare and Medicaid programmes, “the true state of US government debt is well over 500 per cent of GDP”.



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  1. ce399 said, on 22/04/2011 at 22:06

    By the end of 2011 Greece’s debt will around 150% of GDP (the numbers here are based on the 2009 IMF Article IV assessment; we make some adjustments for the worsening economy and the restating of numbers since that time – for example, the fiscal deficit in 2009 will likely turn out to be about 8 percent, which is double what the IMF expected until recently). About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany. Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders.


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