Gary writes: “Though the smart money gets this, it will certainly cause some explosive headlines. You sure? I’m having second thoughts. If the government fails in securing funding, a very high probability of systemic collapse.”

Hat tip : Gary E.

Sources: IMF WEO Octoter data and OMB…

Spreadsheet:

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

25 Responses to “The US Deficit in Global Perspective”

  1. JustinTheSkeptic says:

    How does it feel to be a prisoner in your own land?

  2. Paul S says:

    There is no way, in our present state of contraction, that US GDP will be 14.5 trillion in 2009.

  3. DL says:

    The question of the national debt is at least as important as the deficit.

    Japan’s government debt-to-GDP ratio is about 1.8. There’s no way that they’re ever going to pay that off, absent a very substantial devaluation of the Yen.

    I hope we don’t go down that road.

  4. monahk says:

    These are PPP numbers which exaggerate non-tradable and agricultural sectors. Using exchange rate rather than PPP might be more useful since you are making a point relevant to cross border finance. It will certainly be more sobering. Because for most EM countries PPP GDP is significantly higher than official exchange rate. It is interesting to see how much larger a proportion of exchange rate GDP China’s savings are than when looked at using PPP GDP.

  5. super_trooper says:

    Budget deficit 12% of GDP, on par with Sweden during the financial crisis in 1993. On can only hope that the US becomes as fiscally conservative as the socialists in Scandinavia got.

  6. arcticpup says:

    how are the Chinese doing… are they still expected to have 8% GDP growth???

  7. super_trooper says:

    “Japan’s government debt-to-GDP ratio is about 1.8.”
    Where are they getting the money from? Japan itself, only?

  8. Bruce N Tennessee says:

    Paul S…

    I had the same result..no way our GDP finishes that high in 2009. And DL is correct. All those past deficits add up to debt…so how do we compare in that regard?

    http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

    Here our debt is listed as 73% of GDP. Spain is 44.2%…given they are going to have a much bigger deficit than we are based on GDP this year, but they start from a better position in regards to debt that has to be serviced.

    Japan, Italy, Greece…yeah, they are miserable, already with debt/gdp greater than 1 already…

    What developed countries start in much better position?

    Britain, Spain, Sweden, Finland, Austria, Switzerland, and so on…

  9. Steve Barry says:

    I have always been much more worried that total credit, which includes government debt, and increases with deficits, is 359% of GDP. The government can’t print the 20 Trillion needed in the US alone to get that under control.

  10. Myr says:

    Yeah. It’s a ginormous problem. I’m still riding the bull market in $’s(short dated treasuries only!) for now. Later this year, when gold gets back down towards 600 I’ll get out of my $’s.

  11. globaleyes says:

    Today’s thought:

    NONE OF THIS DEBT is getting paid back. Doesn’t that take money out of circulation mandating the printing of new money just to break even ?

  12. dwkunkel says:

    Since almost none of this government debt is ever going to be repaid, why don’t we just admit we’re bankrupt and default on all of it.

  13. financial says:

    Maybe a detail, but you know us Canadians are kind of touchy about these matters, but Canada’s foreign debt is around 60% of its GDP, as for its percentage of the US economy its probably 6%.

    Second, what’s that spreadsheet??? you linked, me thinks that this relates to your AdSense report and not the underlying data

    Regards

  14. retrogrouch says:

    Comparative deficit/GDP is interesting, but now compare that to total national debt/GDP. That’s more telling. A large short term deficit is different from a massive national debt.

  15. ellidc says:

    At these interest rates, we are already effectively defaulting on it in real terms. Nominally, the Federal Reserve will step in and fund it. Whether that eventually shows up as massive inflation domestically, or massive dollar weakness internationally and when is the open question. Or maybe we will just end up dollarizing the entire global economy, with nobody using domestic currency any more.

  16. try2bamused says:

    Shout it from the mountaintops: Ben Bernancke saves the world! LOL!

  17. algernon says:

    The US ’09 budget deficit will easily exceed the planned $1,750,000,000,000 as unanticipated decline in tax receipts bloon it well past 2 trillion toward 15% of GDP.

    When this has little to no positive effect, what will the Keynesians say then?

  18. DMR says:

    arcticpup said

    “how are the Chinese doing… are they still expected to have 8% GDP growth???”

    Does not matter. They have no deficit. Zero divided by any number is still zero!

    Barry, I think the “systemic collapse” call is too dire. At Bretton Woods, we were able to pull off a systemic transition without total collapse and the situation then was far worse. For all the Great Depression analogies flying around these days, people forget that it is not the US this time but China that is the isolationist net creditor that has yet to figure out how to flex its muscles and put its idle capacity to use and restore some order in the world system. The US with its war and debt is much more like France and Britain were before the start of WW-II. Cheese eating surrender monkeys anyone? :)

  19. willid3 says:

    retrogrouch Says:

    Comparative deficit/GDP is interesting, but now compare that to total national debt/GDP. That’s more telling. A large short term deficit is different from a massive national debt.

    why would that be any more telling? if they are running a deficit this year, the odds are they were last year, and the decades before that.

    One of the few differences between the US and other countries (and its not consistent and only for a few decades) is that we tend to expect value for tax money spent. and we also tend to demand and require competency from our government (at least normally we do). thats not been the case for a majority of countries.
    and i am not sure if we got number from China if we could believe them.
    not that we can trust ours much more, but there are times they will at least let us see the reality of whats happening.
    and while we can fret about finding lots of money because some of our business leadership have led us over a cliff, there is no body left to pick up the pieces of what they have trashed. and unless you think the US is going to collapse in a less than a decade and the rest of the countries won’t (even if they are in worse shape), the amount of money borrowed isn’t that a big of a problem. because if the US collapsed
    there wouldn’t be much of the rest of the worlds economy if any

  20. DMR says:

    willid3 says:

    “One of the few differences between the US and other countries (and its not consistent and only for a few decades) is that we tend to expect value for tax money spent”

    Even monkeys expect a fair return in exchange for a grooming. What country were you thinking of whose people do not expect value for money spent? Does such a place even exist? Even the loosest spenders today are looking for social or economic stability in return for the billions being shoveled out. They may have a different value structure and probably have tactical differences from you and given the multitude of theories out there, someone is definitely wrong. But that does not mean that anybody is spending money with expecting value in return.

  21. ya know, thinking about that chart, I don’t care how many Keynesians one lines up, I still can’t reach the conclusion that that is at all “Stimulative”, or, even Bullish..

  22. Pat G. says:

    I had a cheery thought today. The metals markets know this too. The only thing that has been holding them in check are redemptions and margin calls. Everytime “near” money is liquidated to address either that’s just less metals which have to go through that process. Oh, these guys will get back in later but at a much higher price which will create a floor over me.

  23. VangelV says:

    “There is no way, in our present state of contraction, that US GDP will be 14.5 trillion in 2009.”

    Sadly, there is a way. If the USD is devalued sharply you could see GDP figures that are higher than $14.5 trillion even as the real economy collapses.

  24. ottovbvs says:

    “There is no way, in our present state of contraction, that US GDP will be 14.5 trillion in 2009.”

    …..So what is it going to be then?……13.7trillion…….so as % of GDP it jumps to maybe 15% or thereabouts…..doesn’t really alter the perspective does it….Doomsayers chill out…. I think back in 1943, the highest it ever was it hit about 40%…..a bit better than Germany today…..

  25. ottovbvs says:

    DMR Says:

    March 2nd, 2009 at 4:27 pm”The US with its war and debt is much more like France and Britain were before the start of WW-II. Cheese eating surrender monkeys anyone?”

    …..Please note the cheese eating surrender monkeys volunteered for a war with the most formidable military power in the world at the time which they knew would be fought on their territory while the steak eating macho men a comfortable 3000 miles away from any bullets had to be forced into it….But don’t let historical facts get in the way……..