The 10 Countries Deepest In Debt: 24/7 Wall St.

From 24/7 Wall St.: The Greek government on Sunday agreed to drastic austerity measures in the hopes of securing a 130 billion euro bailout from international creditors — the second bailout in two years. The measures include dramatic cuts in pay, pensions and government services.

Read: The 10 Countries Deepest in Debt

The creditors, which include the European Commission, the International Monetary Fund and the European Central Bank, demanded that by Wednesday Greece show clear evidence of how it will make 325 million euro of the 3.3 billion euro cuts. Greece, which has among the worst debt in the world, faces default as early as March if it does not get the bailout.

In addition to Greece, several European Union member countries now face overwhelming government debt. On Monday, Moody’s downgraded six countries, including Italy, Portugal and Spain. Other countries, like Germany and Japan, also have burdensome debts, but unlike Greece or other troubled EU members, their debt problems are not unmanageable. 24/7 Wall St. has identified the countries that have the highest debt-to-GDP ratios.

Many of the countries with the highest debt levels relative to their gross domestic products have been hit hardest by the global recession. Greece, Ireland and Portugal all have unemployment rates above 14 percent. Wealth in these countries is extremely low. In the case of Portugal, GDP per capita in 2010 was just $25,575, lower than every country in the developed world except Slovakia. The combination of extremely high debt, high liabilities and sinking national productivity has resulted in credit downgrades to below investment grade, or junk, bond status. Moody’s rates Ireland “Ba2,” Greece “Ca,” and just downgraded Portugal to “Ba3.”

The increasingly dire situations of several of these nations have forced their governments to enact desperate measures or face financial and economic ruin. Greece is not the only country to recently pass and implement austerity measures. In November 2011, Portugal passed a new austerity budget, which raised taxes on the population and cut the wages of all government employees. In Italy, the retirement age has been raised, and levees on pensioners have gone up as well.

Not all of the countries with extremely high debt relative to their GDPs are doing poorly. Government debt of Germany and Japan is high, but these countries can afford it. Their high debt-to-GDP ratios are balanced by relatively strong economies and wealthy populations. Germany has the highest GDP in Europe and the fourth highest in the world. While Japan's economy was derailed by the earthquake and resulting nuclear tragedy, it remains the third-largest economy by GDP.

Though countries like Germany, France, UK, the U.S. and Japan continue to have relatively stable economies despite their massive debt, this may not always be the case. Last year, Standard & Poor's downgraded both France and the U.S. from perfect AAA ratings. Yesterday, Moody’s gave France and the UK negative outlooks.

While many of these economies have started to recover from the recession, they continue to accrue debt. In some cases, even the world’s wealthiest economies have been forced to pass austerity measures of their own. Many U.S. states, for example, have made substantial cuts to government workforces.

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24/7 Wall St. ranked developed countries by estimated general government debt as a percentage of nominal GDP for 2011, based on data provided by Moody’s Statistical Handbook for 2011. 24/7 also reviewed nominal GDP, nominal GDP growth, GDP per capita (PPP) and sovereign credit rating from Moody’s. All of the data from the handbook is an estimate for 2011, with the exception of GDP per capita, which is for 2010. Unemployment rates are from the Organisation for Economic Co-operation and Development.

These are the 10 countries deepest in debt, according to 24/7 Wall St.:

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Comments

[Jimmy Wang]

03:16 PM on 03/01/2012

Socialized medicine is costing Japanese citizen dearly and many Japanese citizen have visit their doctor on daily basis which I found to be obsurd. That said, $10/day for a hospital visit is something that we should push for and private practice is not allowed just like Canada. We already have government run health care system in the USA. Just expand our VA so you will have both and allow the public to choose the government plan vs private insurance. That would be most idealistic in the USA.

[Kai-HK]

10:17 PM on 02/15/2012

Further proof that Big Government welfare states are a failure. Time to get back to free market capitalism and dial back ruinous government intervention in the economy.

[intellifran]

12:45 PM on 02/21/2012

yes, but there is some government intervention that is necessary. The deregulation of banks is what lead us to our current trouble. Necessary regulations should be welcomed and unethical business practices should be stopped.

[Kai-HK]

10:24 PM on 02/21/2012

Intellifran:

Capitalism is predicated on regulations and the rule of law. In fact, it is a central principle that natural rights to property, liberty, and equality be well institutionalized and protected through the rule of law, power of contracts, etc

However, the guiding principle of regulation is that it should not violate the natural rights of one group over another with government relegated to the limited role of protector of property and as a regulator of fair and equal process for all with rules, laws and regulations that apply to all EQUALLY or to no one at all; rather than what it is today, a biased distributor of fair outcome for some at the expense of others.

The housing crises was not by a lack of regulations it was caused by government intervention in the market.

To list a few:

1) The Fed kept interest rates low to spur the economy and drive growth and unemployment. This intervention caused a bubble.

2) The Treasury issued debt to fund wars and welfare (a bulk of our budget are now market-distorting transfer payments). This huge amount of borrowing by taking advantage of the savings glut out of Asia was not sterilized by the Fed and added to the bubble.

[Kai-HK]

10:25 PM on 02/21/2012

3) Regulations that gave preference to housing loans as risk-free over other types of assets created the incentive for banks to produce and hold more of them since it had a lesser impact on Tier 1 capital requirements

4) Tax policy that gives advantage to debt over equity (interest payments are tax deductable dividends are taxed) which encourages banks and people to lever as much as possible.

5) Further tax policies that promoted housing with high leverage (again interest is tax deductable) with no/low tax on housing capital gains.

6) The direction of Freddie and Fannie to take on greater and greater subprime mortgage loads by congress created a moral hazard with them becoming the buyer of first and last resort. In addition, direct competition in the market with capital cost (due to government backing) lower than private banks caused additional yield chasing and more risk perverse behavior by all market participants. They fact that F&F basically set the underwriting standards for the market created further moral and financial hazard.

7) HUD, Fed, and Congressional interference in private markets that forced mortgage underwriters to stop redlining and lend to more risky borrowers.

8) A increased history (Chrysler, Continental Illinois, Mexico debt holders, LTCM, S&L, etc) of bailouts that gives lenders and borrowers as sense that the government will not let them fail creating an implicit moral hazard to take on more risk than one normally would.

[eric14]

07:46 PM on 02/15/2012

British debt is around £1.1 Trillion. Not £1.99 trillion. You missed out some zeroes. Like £1.0099 trillion.

[Li Fuxin]

05:25 PM on 02/15/2012

What are these numbers? US debt should really be at 15 trillion right? If it's only 12.8 trillion why do people fight over Congress the whole last year to raise it to 16?

[Li Fuxin]

05:27 PM on 02/15/2012

I meant the debt ceiling. Damn how do I edit the comment in HuffPost?

[Bret Alan Cebulla]

05:23 PM on 02/15/2012

Furthermore, who prints their money? I'll bet it's not their own Governments. I'll bet it's much like The Fed.

[Bret Alan Cebulla]

05:20 PM on 02/15/2012

Don't all of these countries have or belong to some for of Central or World bank?

[bonobos61]

05:03 PM on 02/15/2012

Some of you should learn to make a difference between a social driven state who is not necessary a socialist state , (as are most of the northern-european countries)..... And a Marxists leninist system / near dictatorship such as Cuba and Venezuela .
Having a strong social system do not means you are a socialist state !!
Somme of your so called socialist states, have left wing governments !
All these FOX news junkies in the US should spent their energy on trying to do something for their country and go out work instead of taking welfare instead of criticize the "Socialist" states.
If you hate them so much, stay home ! Don't visit these countries, keep al your factories home, don't have your PC made in China, make your 501's at home, put your Nike shoes yourself in your own towns, keep your Mc Donald's in the US, don't buy french wine, no european cheeses, Don't by any foreign ( socialist) goods, Make a big fence around the US and dwell in your own misery of unemployment and debt. Also, deport all these mexicans you take advantage off and have the over-weighted, obese but proud american citizens go in the fields and pick the tomatoes and potatoes' , you will resolve the unemployment don't you think ! Americans, stop trying to export the american dream, it does NOT work somewhere else !

[Erikhuffpost]

01:06 PM on 02/16/2012

It's the "S" word here. It is strictly off limits. I used it once, but I think I got away with it.

[intellifran]

12:50 PM on 02/21/2012

Having a McDonalds in every country is the defintion of capitalim, so I don't know where you're going with that. Also, may Americans would love to bring out factories back, but some companies just don't want to pay American wages. Regardless I think the first think we should do (that you failed to mention), is ban all BP oil. I wonder how that wold effect British retirement funds...

[Mary Mendy]

04:23 PM on 02/15/2012

I had to go back through that list again, really? Japan? I would never have guessed.

[ArKelsey]

09:31 PM on 02/29/2012

They really appear to be managing it well, huh? I wouldn't have guessed, either.

[trish333]

03:37 PM on 02/15/2012

The last gasps of European socialism is in full view.

[Ansdlmol]

03:41 PM on 02/15/2012

But the four most socialist of the European countries are not mentioned. The countries deepest in the mire are fundamentally free enterprise proponents.

[IfIonlyknew]

03:52 PM on 02/15/2012

Facts don't make any sense to Baggers.

[sonoflars]

03:08 PM on 02/15/2012

I find it amusing that a"socialist country" like Norway don't make this list. They are ranked as the best country on the planet to live in. Maybe socialism isn't the worst thing in the world that can happen to a country.

[trish333]

03:11 PM on 02/15/2012

I don't see Cuba or Venezuela on the list either but I have no desire to emulate them.

[Thomas Green]

04:51 PM on 02/15/2012

According to a recent poll Canadians are happy with the results of the War of 1812. We managed to keep your infection out of our country.

[FlavourPacket]

06:46 PM on 02/15/2012

Exactly! If a "socialist" country is on this list, then it's there because socialism made its economy fall apart. If a "socialist" country is not on the list, it doesn't matter because it's still terrible. Your logic is really airtight in its own way. It's at least fact-tight.

[sidecarman]

03:02 PM on 02/15/2012

since the usa can just print up currancy it should print up $500 billion and give it to Greece. or make greece the 51st state

[Ansdlmol]

03:46 PM on 02/15/2012

You can't just print up money. You have to borrow to cover the paper. The reason why Cuba and the like do not appear is because they have not borrowed in order to prop up their standard of living......nor indeed have they spent millions/trillions fighting foreign wars and buying grossly over priced, useless armaments.

[sidecarman]

04:22 PM on 02/15/2012

no. we have been printing up billions in the QE program. never mind the usual increases. we only borrow because we dont want to have other loose faith in the value of the currency. borrowing is stupid we should just recall all of the debt with new money. same as the QE but on a huge scale. the currency will collapse but so what.

[intellifran]

12:53 PM on 02/21/2012

You would not call armaments "useless" if you have ever served. Bite your tongue.

[trish333]

02:43 PM on 02/15/2012

Part 2

" And the cost of our debt is one of the fastest growing expenses in the Federal budget. This rising debt is a hidden domestic enemy, robbing our cities and States of critical investments in infrastructure like bridges, ports, and levees; robbing our families and our children of critical investments in education and health care reform; robbing our seniors of the retirement and health security they have counted on.
Every dollar we pay in interest is a dollar that is not going to investment in America’s priorities."

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

[Hoosierbrad]

03:03 PM on 02/15/2012

Thank you for your public service announcement in favor of returning to the tax rates in effect the last time our country ran a surplus! The President of that administration was a Democrat, by the way.

[sidecarman]

03:03 PM on 02/15/2012

someone must have told him that he can print money.

[trish333]

02:42 PM on 02/15/2012

Part 1-

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.
Over the past 5 years, our federal debt has increased by $3.5 trillion to $8.6 trillion.That is “trillion” with a “T.” That is money that we have borrowed from the Social Security trust fund, borrowed from China and Japan, borrowed from American taxpayers. And over the next 5 years, between now and 2011, the President’s budget will increase the debt by almost another $3.5 trillion.
Numbers that large are sometimes hard to understand. Some people may wonder why they matter. Here is why: This year, the Federal Government will spend $220 billion on interest. That is more money to pay interest on our national debt than we’ll spend on Medicaid and the State Children’s Health Insurance Program. That is more money to pay interest on our debt this year than we will spend on education, homeland security, transportation, and veterans benefits combined. It is more money in one year than we are likely to spend to rebuild the devastated gulf coast in a way that honors the best of America."

Senator Barack Obama
Senate Floor Speech on Public Debt
March 16, 2006

[Hoosierbrad]

02:40 PM on 02/15/2012

Funny about this list, every con in the world thinks the sky is falling because our debt is at 85% of our gdp, but look at Japan!

Our debt to gdp was over 100% in 1948, and we grew out of it; we can do it again.

[HelloWerld]

05:03 PM on 02/15/2012

Only Republicans care b/c they're trying to tank the economy AGAIN to try to unseat Obama and it's not working. All at the expense of the people who could be back to work if they'd actually created any of the jobs jobs jobs they said they would over a year ago. What animals.

[Bret Alan Cebulla]

05:30 PM on 02/15/2012

I was debating (and I use that term loosely) with someone today about Wisconsin. I reminded this person that after all Walker's promises there is still a budget deficit, the response I got was "well it's smaller than Doyle's" So apparently deficits are ok as long as it's a Republican, and as long as it is smaller than a Democrat's deficit. At least he was consistently inconsistent.

[eric14]

07:51 PM on 02/15/2012

I keep seeing mournful references to Japan's lost decade - the decade when unemployment never rose above 6.5% and when exports boomed.

[fortressfountain]

02:39 PM on 02/15/2012

The affordable healthcare act is not affordable to the people who are paying for it. I thought it was not rationing.