When you think of debt-ridden nations, so deep in the hole they’ll never be able to claw their way back out, you probably think of some Sub-Saharan failed state or a godforsaken voodoo-infested jungle in the back of beyond.
However, you’d be wrong.
This list may surprise you. The nations which are laboring under the greatest debt load are relatively prosperous on the surface, and many don’t realize just how rotten these economies are until they pull up the lid and have a look.
How some of these nations are going to get out of the mess they’re in we have no actual idea.
In this list post, let’s look at:
9 Nations Which are Deep in the Debt Hole
USA – 102% Debt to GDP
A lot of people have the misconception around the world that America is the richest country in the world.
They’d be wrong. What America has is an endless line of credit and a massive, ready-to-strike army to back up their ability to keep borrowing even long after the debt has come due.
The USA finished out 2015 owing 102% of GDP. They owe money to the Federal Reserve bank primarily, which isn’t really that big a problem since all 12 members of the board are government officials, but they also owe shocking amounts to China and other nations who may not have their best interests at heart.
If debt is wealth, then the USA is indeed one of the richest nation on the planet. If debt isn’t wealth, it’s financially insolvent. It really depends on which way you look at it.
America’s saving grace is that fact that it has an 18 trillion dollar economy, and so even a little percentage in growth can send the tax money rolling into the coffers and they can get out of the mess they’re in.
Will America make it? They wouldn’t be the first seemingly invincible empire to crumble under the weight of debt, but only time will tell.
Ireland – 109%Debt to GDP
Let’s look at an economy which was doing decidedly well until the ’07 meltdown, at which time everything went very quickly south and the emerald isle began drowning in repayments it could never make.
Ireland thought it was a never ending party when it joined the euro zone and started grabbing fistfuls of Euro notes and spending it like wildfire. Clearly, nobody read the terms and conditions because a couple of years later when the debt came due, Ireland was unable to repay.
Ireland has undergone painful reform and spending cuts in recent times to try to get the problem under control. Nonetheless, it closed out 2015 still owing 109% of what it made that year.
How do you get out of that one, pray tell?
Cape Verde- 114% Debt to GDP
Most people reading this list will probably pause and think…huh, where?
Cape Verde is a tiny little volcanic island off the coast of Africa. We admit we had to Google it and find out, too, so don’t feel so bad.
The problem Cape Verde has, apart from being unknown to the world, is that it owed 114% of its GDP to the bank. Yes, that means for every $1 it earns it owes $1.14 – not a nice position to be in!
The island depends largely on the service industry which makes up most of its economy since it struggles agriculturally and lacks resources.
With an economy of $1.8 billion only, the kind of money Donald Trump sets aside for lunches for the year, Cape Verde could probably see the light of day yet.
How do you do it, though, when nothing will grow on your land?
Portugal – 130% Debt to GDP
How would you feel if every month you got paid, your entire paycheck was taken automatically and you still owed 30% of it rolling over to next month?
That’s pretty much the insane financial mess Europe’s southern nation of Portugal has gotten itself into. It’s quite incomprehensible how elected leaders wouldn’t notice this fact while it was occurring, but then again, when and where have world leaders ever done the job they were elected to do?
Portugal has been getting squeezed hard. With the nation collapsing under the weight of debt owed mostly to the European Central Bank and IMF, tough reforms and spending cuts have seen it’s citizens suffer in recent times.
It’s that old catch-22, you’ve got to borrow to pay the bills, then you’ve got to borrow more to pay the bills on what you borrowed, and before you know it you’re royally screwed!
Italy – 132% Debt to GDP
Another Eurozone nation makes the list (are you noticing a pattern here?)
Italy, much like Portugal and Ireland, apparently got a little carried away when the Euro extravaganza began before the massive global meltdown which sent the global economy into a tailspin in 2007-2008 derailed the party.
A nation like Italy, with a massive economy, could bring the entire euro project to a grinding halt if it got into extreme financial difficulty and could not repay its debt.
For now, Italians are hanging on and saw their stock market rise significantly this year, but even the Eurozone financial overlords have stated frankly that if Italy goes the way of Greece, it’s all over.
Jamaica – 132% Debt to GDP
Tied with Italy in owing $1.32 for every $1 made is the Carribean island nation of Jamaica.
With an economy based on natural resources, agriculture and tourism, Jamaica has some chance of getting out of the debt shackles when commodities rebound, but it’s still stuck for the moment in the terrible economic position of being smacked about by owing other nations vast quantities of cash.
When you calculate Jamaica’s debt per population it comes out at a terrifying $600k per person. Yikes!
Lebanon – 134% Debt to GDP
It’s pretty hard to prosper when the whole world is falling down around you.
Lebanon is in just such a position. With terror attacks rocking it and stuck between Syria and Palestine, Lebanon drew the short straw when it comes to geographical location.
Owing 134% of Debt to GDP, Lebanon is the third most indebted nation in the world.
Greece – 177% Debt to GDP
Throughout 2015, Greece made headlines several times as battles in parliament over whether to continue to accept strict and cruel austerity measures from European bankers could be accepted any longer.
The people of Greece were and are deeply divided on this issue, and a tug-of-war which came right down to the wire eventually saw the Greek government accept the terms in order to get more Euros from the ECB and pay their bills.
It is unclear how, and even if, Greece can ever get out of the debt-ridden mess it is in. There has been repeated talk of it leaving the Eurozone, but Brussels crew say it isn’t legally possible anyway.
Greece really is in one big, serious mess of epic proportions. Every time the cash comes in, it goes out just as fast, and the people are left without the basic public services they need.
The second most indebted nation in the world might have a long way to go before it can recover, but wait until you see who’s number one….
Japan – 230% Debt to GDP
Japan tops the debt list at number one, owing a staggering 230% of their take every year to the banks.
With the third largest economy in the world, you would think it would be easy for Japan to wave a magic wand and make the cash roll in. Not so!
The current PM, Shinzo Abe, has gone on a money printing spree to try and encourage the Japanese to buy more goods and services as well as to devalue the Yen and make exports more attractive to other nations.
Yet while the Japanese economy is in fact growing, it is difficult to see how any nation can ever get out of this level of debt.
For every $1000 you make, $2300 goes out the same day. Damn!
The World Debt Summary
The entire world is clocking up debt at an alarming rate, and it seems to us here at Ninestein like the 07-08 meltdown, which was caused by risky borrowing to begin with, was never actually solved but rather papered over with more funny money.
Are we headed for a financial crash the likes of which we have never seen? We certainly hope not, but unless someone comes up with a better idea than borrowing more to pay off what we’ve already borrowed, it seems inevitable, don’t you think?!
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