American citizens and people throughout the world have had reason to be very concerned and upset by the United States’ financial condition and the very real prospect of a default on its mountain of debt — and the spectacle of a deeply divided government seemingly unable to get to practical solution.
What may startle observers is how the United States has joined a short, and not so distinguished list of nation’s whose debt ratings have a S & P Outlook for 2011 of Negative. That fact was revealed in a recent graphic AP interactive that provide an overview of the debt crises.
I decided to explore the information and discovered – as often happens with charts and graphics on the Internet – that it was built using faulty data.
When I looked at the World debt section, I found I got different Gross Domestic Product numbers from the selected countries. For instance, the interactive “select country” box showed the GDP for the U.S. was $2.2 trillion while the map mouse-over showed the correct number of $14.7 trillion. I also found some missing countries on the map.
That becomes important in looking at debt as a percent of GDP. In that regard, the U.S. ranks 38th globally in public debt as a percent of GDP (at 58.9%), according the CIA World Factbook, and well below Japan, which tops the list at 229%.
Still, only a handful of nations earned a negative ratings outlook on the S & P Outlook for 2011 (indicated in red in the map above) and listed below:
| Country |
GDP
US $Bil
|
Debt as % of GDP | S & P Rating |
| Belgium | 397 | 98.6 | AA+ |
| Portugal | 247 | 83.2 | BBB- |
| Egypt | 501 | 80.5 | BB |
| Hungary | 190 | 79.6 | BBB- |
| Spain | 1,400 | 63.4 | AA |
| Jordan | 34 | 61.4 | BB |
| Cyprus | 23 | 61.1 | A- |
| United States Of America | 14,700 | 58.9 | AA+ |
| Vietnam | 278 | 56.7 | BB- |
| Croatia | 79 | 55.0 | BB- |
| Aruba (Netherlands) | 2 | 46.3 | A- |
| Montenegro | N/A | 38.0 | BB |
| Slovenia | 121 | 35.5 | AA |
| Senegal | 24 | 32.1 | B+ |
| New Zealand | 199 | 25.5 | AA+ |
The entire data story shows how the United States and 14 other countries now constitute “our world of negative debt.” But the size of the United States debt dwarfs all the rest put together. It also suggests we’re at a critical tipping point, one that caused Russian Prime Minister Vladimir Putin to accuse the United States recently of living beyond its means “like a parasite” on the global economy and said dollar dominance was a threat to the financial markets.
Gretchen Hamel, Executive Director of Public Notice, likened the deficit to drug addition where the constituents (beneficiaries) of the increase in spending become dependent on it and don’t want to give it up.
“And all those people who want to keep spending? They’ll look out their K Street windows and see these buses rolling by,” she said.
It also prompted a not-so-tongue-in-cheek campaign about boarding buses for Greece, suggesting where this may play out: Namely, raising the debt ceiling without hitting the brakes on spending will lead to our own Greek Tragedy.
Update: Yesterday Fitch (a lesser know credit rating service) announced that the United States was still AAA primarily because American families had shown considerable improvement in their personnel debt management (e.g. lower credit card balances, etc.) and increased savings which Fitch said was the real economic strength of this country.