Monday, July 18, 2011

Debt, Debt, Debt

One of the key economic issues that confuse the average punter is the concept of debt. There are many different kinds of debt and people often mistake private debt for public debt, foreign debt for domestic debt and so on. I have written about debt quite a few times before, here and here and here.

What is especially interesting to note is the debt position of the Norwegians, which have invested the very high taxation proceeds of their oil resources for the future. The net debt position of the Norwegians is -161.5 % of GDP (that is a net credit position of 161.5 % of GDP).

As far as it goes the table illustrates that we are doing reasonably well in comparison to many other countries, but given that we've had 20 years of growth with only one minor period of recession (that's another story due to a revision of GDP figures), we should be in a far better position.

The following table is from The Economist. Data can be deceiving, however. A simple look at this table would make it seem that Japan was in a worse situation than Greece, but the Greeks mainly owe foreigners, whereas the Japanese government has mainly borrowed from Japanese citizens.

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