Interactive map of World Debt | Hacker News Reader

Interactive map of World Debt

economist.com

31 pointscwan13 comments

Due to adding together the various categories of debt, this is fairly tricky to interpret. Countries with large private-sector corporations and advanced financial sectors (like the U.S. and Western Europe) generally have more corporate debt, because leveraging up is almost ubiquitous--- even conservative companies often use leverage, they just don't do it to as high a multiple. Meanwhile, in countries with a lot of mom-and-pop businesses and small or heavily regulated finance sectors, business debt is quite low. The bottom three on the financial-sector debt, for example, are Russia, India, and China, three countries in which the financial sector is heavily state-controlled.

Not that that necessarily makes the debt good or ok, but to a large extent it seems it just correlates with "has a non-government-controlled financial sector".

Wow, check out Household debt. I'm not surprised to see Brittain, the United States and Canada top the list, but can anyone tell me what is going on with Switzerland?

I always thought the Swiss to be a wealthy, financially conservative lot.

Lots of wealth, or the appearance thereof, is directly due to debt.

My guess: expensive real estate, distorted tax rules that make it advantageous to hold a mortgage [1], and availability of very long term mortgages (up to 100 years). So people take a mortgage and never pay it off, even if they could afford to. Net household savings / debt statistics might tell a different story.

[1] Though IIUC the mortgage deduction and its counterpart of taxing the "income" of living in your own house rather than renting are going to be phased out. So this reason would not apply for much longer.

Actually taxing the income of living in your own house as similar to rent sounds reasonable to me. Making debt payments tax deductible is a bigger problem.

The Swiss tax system benefits people taking a mortgage on their house. When you own a house you have to pay taxes around what you would pay to rent the house. So when you don't have a mortgage on the house you pay twice. Once the "rent" plus the normal property tax. The smart thing to do is to get a mortgage, so you don't have to pay the property tax. The interest to pay will be far less than the property tax.

I don't think you can draw any significant conclusions about each country's financial conservativeness based on this data alone.

For instance, note that the BRIC's household debt is very low compared to the developed countries. It might just be the case that the real interest rates in wealthy countries are lower, so it's not necessarily a bad idea to have debt there.

Investing cash will create new jobs, spending will preserve existing jobs and saving cash will destroy jobs & the economy.

Somebody's savings is somebody else's debt. The whole world can't be a net saver, as nice as that would sound.

Sure the whole world can be a net saver. In fact it is, which is one of the reasons the whole world is getting wealthier.

The counterpart of debt is credit, not savings. Having savings is necessary to be a creditor, but it doesn't imply being a creditor.

Unless I am missing something, the only way the whole world can be a net saver would be for for all of us to start exporting goods and services off-planet. Anything else is simply a mirage that obscures currency inflation. :) Which, on a related note, goes eleventy-fold for anything remotely related to derivative instruments.

Bucky Fuller would disagree. Money stands for something—the real wealth of technology and information. As we continue to create and improve quality of life the real amount of capital in the world increases.

I always liked to imagine that, ideally, an inflating currency would proxy for this real wealth-generation, but that doesn't quite seem to be the case.

Anyway, the important thing is that we're not (simply) printing money. The world gets richer.

Net financial assets are zero. Human and physical capital are obviously another thing. The original post wasn't about that.

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