When Europe Sneezes

What country in the European Union (EU) has the greatest external debt relative to its GDP?

No, it’s not Greece.

Nor is it Portugal or Spain.

But it is one of the “PIGS”.

Ahh, yes! It is of course Ireland.

In fact, Ireland’s gross external debt in 2008 was $2.4 trillion ($2386 billion) while its GDP was only $188 billion giving it the greatest external debt to GDP (1267%) in the world.

This is external debt and not national or so-called sovereign (public) debt.

And the nation with the second greatest external debt as a proportion of their GDP in the EU (and also the world) is…

… Switzerland, with $1.4 trillion external debt to $316 billion GDP (2008) or a ratio of 423%.

In External debt statistics of the euro area (presented at the IFC Conference on “Initiatives to address data gaps revealed by the financial crisis” Bank for International Settlements Basel, Switzerland 25-26 August 2010), Jorge Diz Dias, Directorate General Statistics, European Central Bank concludes:

… a net external debt ratio above 50% combined with a ratio of net interest payments to GDP larger than 3% seems to be a very powerful indicator for potential external debt difficulties in the short to medium term.

The nation with the third greatest external debt to GDP in the world is another EU nation and is none other than the United Kingdom. Yes my friends, the UK has an external debt of $1.3 trillion to compare to its $316 billion GDP, or an external debt:GDP ratio of 408%. The UK, one of three EU powers, has an external debt four times as much as its GDP!

But hang on, it gets better…

Next on the list is Netherlands with an external debt to GDP ratio of 365%, closely followed by Belgium (320%) and Denmark (298%) – all ‘good’ EU nations.

Seventh on the list of nations with the greatest external debt to GDP is Austria at 252% and eighth is another EU power, France at a hefty 236%.

Coming in at ninth place is, yep, another EU nation but perhaps not surprisingly, Portugal at 214%.

Rounding out our top ten nations with the greatest external debt (as a proportion of their GDP) is Hong Kong – at just over twice its GDP.

The Scandinavians of Norway (199%), Sweden (194%) and Finland (188%) are eleventh, twelfth and thirteenth placed, respectively.

And the nation with the fourteenth highest external debt to GDP worldwide is… wait for it… Germany. The EUs undisputed pre-eminent power has an external debt of just over $5 trillion for a GDP of just on $3 trillion; or a ratio of 178%.

Well, I’ll be…

Even Spain’s external debt is at a lower percentage of its GDP at 171% and to add salt to the EU wound, Greece comes in 16th position with an external debt of $552 billion compared to its GDP of $343 billion (161%).

Number 17 on the list is Italy (127%), then comes Australia (111%), Hungary (106%), and closing out the top 20 is none other than the “U, S of A” with $208 billion external debt and $197 billion GDP (106%).

Is this a joke?

No. This is only too real and it belies the EU big three’s propaganda for it clearly shows the following:

  • Nine of the top ten and 17 of twenty top external debtors to GDP are from the EU
  • The three EU superpowers who are endlessly prosletising to the “PIGS” have a higher external debt to GDP than either Italy, Spain or even Greece
  • The US external debt is roughly the size of its GDP
  • The UK external debt is four times its GDP – the 3rd highest in the world
  • Germany’s external debt to GDP (179%) is greater than that for Greece (161%)

What does this all mean? It simply means this:

    1. Greece is but the tip of the proverbial EU iceberg and as one of the smallest member nations has been unfairly used as an example as the first to default on its debt obligations
    2. PIGS is a (perhaps deliberately) unfortunate acronym by EU debt standards
    3. The EU in-toto is a basket case
    4. The current difficulties in the US economy (position 20 in the above list) bode very poorly for the EU
    5. Incredulously, the EU powers especially the UK and Germany have the loudest voice yet also some of the largest debt

In fact, these external debts are mostly debts within the Euro; so much so that the UK, which is in the throws of a double-dip recession and drowning in debt, has most to lose in the event of a Greek default.

Hmmm. That explains the disconnect between the EU noise makers or finger pointers and the minnows who are being pointed to.

The EU has been teetering on the edge for some time but with world opinion mostly focused on the lesser evils of Greece, Spain and Portugal. The greater peril however lies in their greater nation states. Despite well-described corruption in the former nations, it is in Germany, the United Kingdom and France were the EU is demonstrably ‘sick’ – the submerged part of the iceberg. And as the EU continues to unwind economically and a day of reckoning approaches, let’s hope that their individual and collective societies evade any spiral into the depths of social despair; a spiral within the centre of which would be revealed a void for potential re-emergence of political insurrection and even war.

One only has to think of Europe’s involvement in the World Wars; lest we forget.

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