Duff:
I have plenty of info on this topic that I could elaborate on....my heart just isn't in it. I got some bad news on Friday afternoon and I used this past weekend to think about how I spend my time. However, I feel that I owe you an answer.
1. Looking at your list, I see a few major debtors missing so I wonder how you calculated your data - debt as a % of GDP, total liablilties, etc.?
Doesn't really matter - Greece and Portugal are missing and Japan is listed as a credit nation (which they are yet there are major structural imbalances there as well that puts them at risk...i could even throw Germany here as well)
Anyway - again - looking at your list - the major debtor nations are Western, developed nations and the main creditor nations (with the exception of Germany, though there are isssues here as I mentioned) are Eastern or emerging nations - with the BRICS represented.
With strictly a short term view, it would appear that being a debtor nation (at least in terms of your citizenry) is better.
A bit of history:
The empire preceding the US empire was the UK. They reached their peak as the center of the global economy in the first 2 decades of the 1900's. The US supplanted them in the 1920's as the center of the global economy and rose to power as the next empire. The US was a creditor nation at this time and had loaned $ to Britain (as well as others). Plenty can be written here as to the benefits of being a creditor nation as to the growth of the nation from the 1930's - on.
Now, however, the US is the largest debtor nation in the world. China is the largest creditor nation. The torch will be passed to China relatively soon (I would think before 2020)and China will supplant the US as the center of the global economy. The East is rising as the West is diminishing.
As to how it affects the citizens? Currently, I imagine most would rather live in the US v China.
Part of the issue here is currency manipulation. The renminbi is pegged to the dollar as is the Hong-Kong Dollar as well as many other currencies from developing nations. The likens us back to the times of Bretton Woods and fixed rates and causes a chokehold like effect on the US. Currencies that are pegged need to be allowed to appreciate -
The other issue is that it the swinging of the pendulum socially has not caught up with the financial pendulum. As China and the other creditor nations develop, living conditions will most likely improve as the economic conditions improve. Living under a communist regime v a democratic one may slow the progress but eventually, it will happen or there will be a revolt.
I apologize - I had this prepped better, much more fluid and connected but I have my mind elsewhere. From a very simple example, I think it would be obvious that
1. Joe, who has a maxxed mortgage, a maxxed second mortgage, is tapped out on 4 credit cards and has 2 car loans and is living paycheck to paycheck
would not be in as good as spot as
2. John, who has an affordable (or no) mortgage, a second mortgage with no balance, pays off his credit card purchases every month, owns his 2 cars outright and invests in his 401k and IRA every month.
Every month the amount of interest the US pays on its debt goes up. Where does the money for this interest come from? Where does it go? It is unsustainable and the US has run up debts that it NEVER plans to pay off.
Peace and out, boys. I'll be around but not as much.
