External Debt To GDP For PIIGS, BRICs and a Few Others

The CIA and World Bank websites offer current data on External Debt to GDP. I recently gathered this data and created a table of these statistics for a select group of countries that have been in the news lately - Portugal, Greece, Italy, Ireland and Spain - the PIIGS. While I was at it, I also pulled data for other key countries in order to use it as a basis for comparison.

External Debt is the total public and private debt owed to non-residents, repayable in foreign currency, goods and services.

The goal here is to merely shine a light on the topic and to offer what I believe are a few simple truths:

First, the world is a very interconnected place! Countries and their banks own a lot of each others' assets. Given the leverage this table illustrates, the problems of one country's government or its largest financial institutions can quickly spread to others if a cross border contagion develops.

Second, there are a number of countries that would be hard pressed to bail out their own banks. Think Ireland, and the United Kingdom.

Third, this is yet another measure where Brazil, Russia, India and China - the BRICs - look to be in good shape.

Lastly, all this debt underscores why deflation is potentially a greater threat than inflation. Banks want the value of the assets they lend against to rise not fall, and governments need the value of their tax revenues to increase not decrease. Deflation means shrinking asset values, fewer capital gains and smaller incomes.