Govt Debt to GDP is Incomplete Until You Multiply its Effects by the Size of its Economy
It is one thing to say the US has the largest total debt in the world, but until you measure that as a percentage of GDP, it is fairly meaningless, therefore, multiplying its leverage (debt to GDP), by its total GDP, you get a weighted debt number. Since debt-to-GDP ratios bring risk as they increase, multiplying that risk by an economy’s output essentially multiplies risk times power if the debt crashes.
This demonstrates why the growing US debt crisis is much more significant than Japan’s debt bubble, a bubble that has never deflated after decades. Notice that China is in third place. This does not account for private and corporate debt. China for example, at the time of this article, had much more corporate debt than American companies.
In the case you cannot see it well (or click for a larger version), here is a close up:
US = 51% of the worlds debt risk
That’s right, the US govt contributes over half of the world’s total debt risk.
This is why when America’s debt bubble pops, it’s going to suck the world (and probably Japan) in with it.
If you have global personal/corporate data that I can easily integrate, leave a comment below.