The global debt crisis is escalating further
Posted On March 1, 2020
The global debt crisis is escalating further, not only is Greece owed huge sums of money. Below we list 24 countries that are facing a debt crisis. There has been so much attention in Greece in recent weeks, but the truth is that Greece is only a tiny part of a never-before-seen global debt bomb that threatens to explode at any time. Below we list 24 countries that are facing a debt crisis – and 14 more that are in the danger zone. At present, the debt / GDP ratio is at a record high of 286 percent globally, close to $ 200 trillion in debt. This corresponds to approximately USD 28,000 just under USD 250,000 per person.Furthermore, consider that more than half of the world’s population lives on less than USD 100 per day, so we see that there is hardly any possibility that these debts will ever be repayable. The only “solution”
No way out
In the case of Greece, we have been able to establish that it is possible to build up such a debt that there is literally no way out. The other European nations are trying to find a way to help Greece with a third rescue operation, but it is basically like trying to pay the debt on a credit card with another credit card since almost all European countries themselves are almost drowned in debt. This means that although a permanent solution to the debt crisis in Greece could be found, only a very small part of the problem is solved in that way. The nations of the world have never been as heavily indebted as they are today and it is getting worse with each passing day.
According to a report recently published by analysis company Jubilee Debt Campaign, there are currently 24 countries in the world facing a full-scale debt crisis…
- Costa Rica
- Dominican Republic
- El Salvador
- The Gambia
- Marshall Islands
- Sri Lanka
- Saint Vincent and the Grenadines
In addition, there are another 14 countries that are at risk
- Cape Verde
- Sao Tome a Principle
What is the solution?
Is the solution to letting the “rich” countries pay and save them? The problem is, the “rich countries” are some of the biggest borrowers of all. Take, for example, the United States, whose government debt has more than doubled since 2007 and is now so large that it will not be possible to pay it mathematically.
Europe is in a similar situation where countries are trying to find a way to save Greece, when in fact most of them need to be rescued themselves. All these countries will come and ask for help at some point. The ratio of government debt to GDP has reached record highs since the EU almost collapsed in 2012.
Spain’s national debt / GDP has risen from 69 percent to 98 percent. Italy’s national debt / GDP has gone from 116 percent to 132 percent and France’s government debt / GDP has risen from 85 percent to 95 percent. Belgium has a national debt / GDP of 106 percent, Ireland a government debt / GDP of 109 percent and Portugal a government debt / GDP of 130 percent.
If or perhaps more correctly when these dominoes begin to fall, it will lead to unpleasant consequences in the over-lauded global financial system. Spain has an outstanding national debt of more than one trillion dollars and Italy has more than 2.6 trillion dollars in debt. A write-down of these debts would lead to a series of defaults being started all over the world. The banks in Europe today have loans that are 26 times larger than their equity, so it is easy to see why a write-down of Greek, Spanish, Italian or French debts can cause them to falter and make default themselves.
Equally ominous situation in Asia
China’s economic expansion beat analysts’ forecasts for the second quarter, but the country’s indebtedness increased at an even faster rate. At the end of January 2015, Chinese companies ‘and households’ outstanding loans amounted to 207 percent of the country gross domestic product, an increase of 125 percent since 2008. This figure does not include the Chinese government debt. Adding this, the debt / GDP ratio for China amounts to over 300 percent. In Japan it is even worse. The debt / GDP ratio is now at 230 per cent. The global debt crisis is undoubtedly escalating.