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The World Wide Web Of Debt

Tyler Durden's picture


Who owes what to whom?


Via BBC Business News:

USA: Although the US's overseas debt almost equates to its annual GDP, it is still regarded as a safe bet. However, its credit rating has been downgraded. Although Asia - primarily China and Japan - holds the majority of US debt, Europe has the second largest percentage. This means whatever happens in the eurozone will have a deep impact on the US banking system. Within Europe, the UK, Switzerland and France hold the largest amount of US debt, amounting to hundreds of billions of dollars.


UK: The UK has very large amounts of overseas debt, of which the biggest component is the banking industry. The high debt to GDP ratio is explained by the UK's active financial sector, where there is a great deal of capital movement. This level of overall external debt is generally not seen as a problem because the UK also holds high-value assets. Having said this, the UK economy remains in the doldrums and the country is highly exposed to Irish as well as Italian and Portuguese debt. The UK in turn owes hundreds of billions to Germany and Spain.


Germany: The biggest European economy owes France, Italy and the US most money. However, these economies also owe Germany billions in return. Regarding its relationship with the troubled eurozone countries, Germany is exposed to Greek, Irish and Portuguese, but mostly, Spanish debt. If any of these defaults, Germany will be hit. Its economy is slowing, mainly because of the problems plaguing its eurozone partners. And as Europe's industrial powerhouse, any problems in Germany mean more problems for the eurozone, but also for the wider international system.


Japan: The world's third-largest economy has the highest public debt level amongst developed economies. However, most of its debt is owed internally, so it is not seen as at risk of default. The global financial crisis, this year's earthquake and tsunami, a strong yen and Europe's debt crisis are clouding its current economic outlook. But the government has pledged to turn the country's annual budget deficit into a surplus by 2020.


France: Europe's second biggest economy owes the UK, the US and Germany the most money. However, like in Germany's case, these countries also owe France billions in return. France's problem is that it is greatly exposed to the eurozone's troubled debtors. Its banks hold large amounts of Greek, Italian and Spanish debt. This is causing market turbulence, especially against a backdrop of faltering French growth and low consumer spending.


Spain: Spain owes large amounts to Germany and France. However, its number one worry is bailed-out Portugal, which is indebted to it by billions of euros. As the country attempts to get its own debts under control, there are fears the country could be thrown back into recession after November's parliamentary elections. The bursting of a housing and construction boom in 2008 had plunged Spain's economy into a recession deeper than in many other European countries.


Portugal: Portugal, the third eurozone country to need a bail-out, is in deep recession. It is currently implementing a series of austerity measures as well as planning a series of privatisations to fix its shaky finances and reduce its debt burden. The country is highly indebted to Spain, and its banks are owed 7.5bn euros by Greece.


Italy: Italy has a large amount of debt, but it is a relatively wealthy country compared with Greece and Portugal. However, doubt about Italy's leadership and fears that its debt load could grow more quickly than the Italian economy's capacity to support it have left the markets jittery. France is most exposed to Italian debt.


Ireland: One of three eurozone countries to so far receive a bail-out, Ireland has introduced a series of tough austerity budgets. Its economy is now showing a modest recovery. After the boom years leading up to 2008, the country fell into recession as a result of the global credit squeeze, which ended the supply of cheap credit that had fuelled the unsustainable growth in its housing market. It shows a very high level of gross foreign debt to GDP because, although it is a small country, it has a large financial sector - including a big overseas presence. The UK is Ireland's biggest creditor.


Greece: Greece is heavily indebted to eurozone countries and is one of three eurozone countries to have received a bail-out. Although the Greek economy is small and direct damage of it defaulting on its debts might be absorbed by the eurozone, the big fear is "contagion" - or that a Greek default could trigger a financial catastrophe for other, much bigger economies, such as Italy.



Source: BBC, Bank for International Settlements, IMF, World Bank, UN Population Division

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Tue, 11/20/2012 - 14:11 | 2999312 BKbroiler
BKbroiler's picture

one big circle jerk

Tue, 11/20/2012 - 14:18 | 2999330 Upswaller
Upswaller's picture

Musical Chairs, last one standing gets it up the ass.

Tue, 11/20/2012 - 14:19 | 2999341 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It looks like an octopus.

Tue, 11/20/2012 - 14:22 | 2999346 strannick
strannick's picture

More like a squid

Tue, 11/20/2012 - 14:45 | 2999411 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Same fucking thing.  It's like debating the euro vs the dollar.  They are the same fucking thing.

Tue, 11/20/2012 - 14:46 | 2999432 fourchan
fourchan's picture

whoever debts the most debts the best.

Tue, 11/20/2012 - 14:54 | 2999462 economics9698
economics9698's picture

Over 250% debt and you go bankrupt.

Tue, 11/20/2012 - 15:48 | 2999627 falak pema
falak pema's picture

you r out of the ball park; the meme is over 90% debt you go bankrupt.

Don't become a fiat worshipper. Stay conventional. 

Tue, 11/20/2012 - 15:59 | 2999648 Michaelwiseguy
Michaelwiseguy's picture

You can't have job creation in the USA because factories that produce consumer products were removed from the country.

The Money Math for Job Creation doesn't work due to Globalization and the Federal Reserve Corporation.

Globalization = American Wage Arbitrage = Lower Worker Pay

Federal Reserve Corporation = Private Company that Manufactures Paper Money and Sets its Value


P.S. I'm sorry I have to spell this out on a 6th grade level.

Tue, 11/20/2012 - 17:12 | 2999924 anarchitect
anarchitect's picture

The UK and Japan are not low risk, and Spain is not medium risk. The information is useful but the evaluations are naively optimistic.

Tue, 11/20/2012 - 18:15 | 3000116 Relentless
Relentless's picture

No where is low risk anymore

Tue, 11/20/2012 - 18:34 | 3000169 boogerbently
boogerbently's picture

Wipe the slate clean.

The fiat has no REAL value, anyway.

Reset everyone to zero.


Tue, 11/20/2012 - 23:12 | 3000943 monad
monad's picture

Define unsustainable: Over 90% debt and your children look more like your neighbors than they look like you. 

Revenge Sex: At 250% your children look like your enemies.

Make up sex: the 2nd and 3rd wife. 

Tue, 11/20/2012 - 14:56 | 2999467 ParkAveFlasher
ParkAveFlasher's picture

Gold, bitchez!

Tue, 11/20/2012 - 15:04 | 2999494 Michaelwiseguy
Michaelwiseguy's picture

You can't have job creation in the USA because the factories that produce consumer products were removed the country.

The Money Math doesn't work due to of Globalization and the Federal Reserve Corporation.

Tue, 11/20/2012 - 15:08 | 2999505 ParkAveFlasher
ParkAveFlasher's picture

That's OK, we'll just invite all of our creditors in so that we can service them for free, with our service econ-o-mee.

Tue, 11/20/2012 - 15:52 | 2999642 Michaelwiseguy
Michaelwiseguy's picture


Tue, 11/20/2012 - 15:51 | 2999643 Michaelwiseguy
Michaelwiseguy's picture


Tue, 11/20/2012 - 15:17 | 2999520 11b40
11b40's picture

Then I guess Ireland is the grand champion!

Tue, 11/20/2012 - 14:53 | 2999450 GottaBKiddn
GottaBKiddn's picture

In this case all the participants are on the last chair, and it only has one leg, by design.

How's that Global Unity working out for us, bitchez?

Tue, 11/20/2012 - 14:24 | 2999355 machineh
machineh's picture

Greece 2012 = Germany 1922:

too much debt, can't be paid

Tue, 11/20/2012 - 14:32 | 2999378 SilverDOG
SilverDOG's picture

"Circle Jerk!"

"The Oligarchies favorite board game!"


"Buy one now!"


FED is authorized dealer all rights reserved


Tue, 11/20/2012 - 15:42 | 2999607 kaiserhoff
kaiserhoff's picture

That US debt to the UK has to be recycled oil money and laundered drug profits.  In either case, fuck 'em.  Let them pound sand, or better yet, refer them to our account manager at AIG.

Tue, 11/20/2012 - 15:54 | 2999651 Antifaschistische
Antifaschistische's picture

So, if we owe the UK $835Bill

and....if the UK owes us $ $578Bill

why don't we just shake on it and wipe out their debt and owe them the delta of $257Bill?   (and we could do a few dozen of these based on the infographic)

Oh yah, I forgot....if we did that, that would eliminating $1.413TRILLION of debt (i.e. interest payments) to the banking industry/Central Banks etc.    We can't have that.

Tue, 11/20/2012 - 14:42 | 2999422 HeatMiser
HeatMiser's picture

How come they didn't do a circle for the country called "FED"

Tue, 11/20/2012 - 14:11 | 2999313 Upswaller
Upswaller's picture

Hello China?

Tue, 11/20/2012 - 14:14 | 2999320 Robot Traders Mom
Robot Traders Mom's picture

I love how Debt/GDP is only off by about 800% for every country, yet it still looks this bad...

Tue, 11/20/2012 - 14:47 | 2999435 Skateboarder
Skateboarder's picture

If they showed the real numbers, it would break minds, or so I'd like to think.

Wait... people don't give a fuck even if they did show the real numbers.

Tue, 11/20/2012 - 14:16 | 2999325 AmCockerSpaniel
AmCockerSpaniel's picture

I can't find China in any of these circles

Tue, 11/20/2012 - 14:24 | 2999353 Robert-Paulson
Robert-Paulson's picture

Yeah,  no shit....what's up w/ dat?

Tue, 11/20/2012 - 14:25 | 2999358 machineh
machineh's picture

All their bond are belong to us!

Tue, 11/20/2012 - 14:28 | 2999369 sitenine
sitenine's picture

China and Japan were both mentioned in the opening paragraph.  Sure, the charts are mesmerizing and all, but reading helps too.

Tue, 11/20/2012 - 15:14 | 2999514 Robert-Paulson
Robert-Paulson's picture

It's says China and Japan are the largest holders of US debt.....It then includes Japan on the chart, but leaves out China??



Tue, 11/20/2012 - 15:44 | 2999613 Upswaller
Upswaller's picture

My point too.  Perhaps it not only needs to be read, but comprehended by our critics.

Tue, 11/20/2012 - 16:09 | 2999695 akak
akak's picture

Perhaps because China, while a large holder of US debt, is no longer a net buyer of US debt.

I was under the impression that the charts above are representative of net debt flows (purchases), not holdings.

Tue, 11/20/2012 - 14:18 | 2999329 daxtonbrown
daxtonbrown's picture

Thank goodness none of these countries fudge their books, or we could really be shit outta luck.

Tue, 11/20/2012 - 14:17 | 2999333 Jim in MN
Jim in MN's picture

I owe other sentient beings compassion.  Is that in the chart?


By the way these pics would make excellent coins.  The new Drachmas perhaps, or a nice Perth Mint issuance.

Tue, 11/20/2012 - 14:18 | 2999334 Dealer
Dealer's picture

No risk of that.

Tue, 11/20/2012 - 14:19 | 2999337 sitenine
sitenine's picture

Interesting, but I have questions.  Who is likely to default first, and who is likely to collect the largest portions of what is owed them in the long run? The future is obviously no longer about growth, but rather what and how much can be extracted from debtors as resources become more scarce and less efficiently distributed.

Tue, 11/20/2012 - 14:30 | 2999374 youngman
youngman's picture

I think the one that defaults first wins the most spoils.....that last one will have nothing to help them out...Greece for instance...they default...humanitarian aid will por into the country...blah blah blah...the last guy the food will all be gone..

Tue, 11/20/2012 - 14:31 | 2999376 earnyermoney
earnyermoney's picture

Usually, the meanest loan sharks with the bigger guns collect the most.

Tue, 11/20/2012 - 18:35 | 3000172 boogerbently
boogerbently's picture

....hence, our "safe haven" status.

Tue, 11/20/2012 - 14:23 | 2999352 azzhatter
azzhatter's picture

It looks completely sustainable

Tue, 11/20/2012 - 14:24 | 2999354 forwardho
forwardho's picture

Does anyone find it odd that debt to China is not on any of the super neat graphics? Its almost like they and their holdings are insignificant, or pehaps it made the charts to scary.

Tue, 11/20/2012 - 14:24 | 2999356 Tinky
Tinky's picture

I surmise that these charts are best interpreted while under the influence of Peyote.

Tue, 11/20/2012 - 14:26 | 2999365 machineh
machineh's picture

That's what the borrowers were on, when they signed those IOUs ...

Tue, 11/20/2012 - 14:35 | 2999390 formadesika3
formadesika3's picture

Edward Tufte on Mescaline.

Tue, 11/20/2012 - 14:26 | 2999360 wagthetails
wagthetails's picture

for S's and G's i'd love to see the end results if you cancelled out offsetting debt.  I'm not saying i want to start that inflation fire, but it would be interesting to see the net result of this elephant walk

Tue, 11/20/2012 - 14:27 | 2999368 NEOSERF
NEOSERF's picture

The last Greece chart (great charts by the way) shows why we are minutes away from yet another tranche of money being bestowed on Greece...France is falling fast and not paying Greece will have Germany all alone in the AAA camp by spring.  I believe the countries use the highest rating of the three rating agencies so France still has one card to fall before their bonds have to be marked up.  But by then, the EU will vote to throw the ratings agencies out which might actually make their forecasts unencumbered and more "real".

Tue, 11/20/2012 - 14:46 | 2999431 timbo_em
timbo_em's picture

Can the BBC re-do those charts factoring in the debt that is held by a country's own Central Bank?!

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