February 2011

Three Countries With the Most Debt

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Three Countries With the Most Debt
When you think of debt you might normally think about your mortgage, your student loan, or the bank loan you took out to buy that car. However the amount of money owed by individuals is truly very small when compared to the huge debt owed by many countries. With the economic crisis as serious as it is now, many countries owe huge amounts of ‘external debt’ meaning they have huge amounts of public (public debt meaning debt owed by the government) and private debt (debt owned by individuals, households and private companies) – plus interest – that they owe to non-residents – organisations, individuals and governments in other countries.
To put this in perspective, the United States currently has a gross external debt of $13.45 trillion which really makes most mortgages seem not that bad in comparison. However the number alone really doesn’t mean that much as owing that much money is fine as long as you have the resources to pay it off. This is why the best way to calculate a countries debt is to look at the debt to GDP ratio where ‘GDP’ stands for ‘Gross Domestic Product’. Sometimes called ‘GDI’ – …