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Author Topic: The Tipping Point of Default  (Read 334 times)
Politico
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« on: January 30, 2012, 07:08:42 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting? Does anybody know of any good papers that examine this issue?
« Last Edit: January 30, 2012, 07:11:20 pm by Politico »Logged

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« Reply #1 on: January 30, 2012, 07:28:29 pm »
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'Obtained'?

The problem we have now is deflation.  Simply print the money.
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Beet
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« Reply #2 on: January 30, 2012, 07:58:41 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

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Does anybody know of any good papers that examine this issue?

http://www.imf.org/external/pubs/cat/longres.cfm?sk=24332.0
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Carlos Danger
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« Reply #3 on: January 30, 2012, 08:07:19 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

But they did subsequently default: http://www.imf.org/external/np/sec/pr/2005/pr05294.htm
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Politico
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« Reply #4 on: January 30, 2012, 08:08:36 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

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Does anybody know of any good papers that examine this issue?

http://www.imf.org/external/pubs/cat/longres.cfm?sk=24332.0

I thought it went without saying that I was asking "what is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting, excluding nations that got assistance from the IMF?"

Thanks for the paper, though. It's officially on the "to do" list. If anybody has any publications not in the IMF or World Bank databases, I would appreciate it!
« Last Edit: January 30, 2012, 08:11:18 pm by Politico »Logged

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« Reply #5 on: January 30, 2012, 08:21:35 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

But they did subsequently default: http://www.imf.org/external/np/sec/pr/2005/pr05294.htm

They qualified for HIPA debt relief as a poor country - that's not the same as default. By 2005, it was 15 years after the peak of their debt to GDP ratio, it had already fallen to 116% from 784%.
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Beet
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« Reply #6 on: January 30, 2012, 08:37:08 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

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Does anybody know of any good papers that examine this issue?

http://www.imf.org/external/pubs/cat/longres.cfm?sk=24332.0

I thought it went without saying that I was asking "what is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting, excluding nations that got assistance from the IMF?"

Then Israel, 1984 at 284%.
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Politico
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« Reply #7 on: January 30, 2012, 08:49:10 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

Quote
Does anybody know of any good papers that examine this issue?

http://www.imf.org/external/pubs/cat/longres.cfm?sk=24332.0

I thought it went without saying that I was asking "what is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting, excluding nations that got assistance from the IMF?"

Then Israel, 1984 at 284%.

Thanks for saving me some time Tongue

Perhaps we're not all doomed after all...
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"Government is the great fiction through which everybody endeavors to live at the expense of everybody else."

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Nagas
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« Reply #8 on: January 30, 2012, 09:01:26 pm »
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What is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting?

784%, by Guyana in 1990.

Quote
Does anybody know of any good papers that examine this issue?

http://www.imf.org/external/pubs/cat/longres.cfm?sk=24332.0

I thought it went without saying that I was asking "what is the highest level of debt-to-GDP any nation obtained in the twentieth century without subsequently defaulting, excluding nations that got assistance from the IMF?"

Then Israel, 1984 at 284%.

Thanks for saving me some time Tongue

Perhaps we're not all doomed after all...

The US has hit 117.5% and had room to spare.

While public debt is still increasing the debt in the private sector/household debt is on the decline.
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Beet
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« Reply #9 on: January 30, 2012, 09:21:32 pm »
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Well, one disturbing trend is that in most historical instances of very high public debt-to-GDP ratios, the upward spike was caused by either a war or a banking crisis. However, during the last three decades or so, we saw increases in debt to GDP to historically high levels in many countries at a time of relative economic prosperity. This is something never before seen in modern history.

We also need to be careful of justifying high levels of public debt by falling private debt. While I was one of the first and loudest to point out that private debt levels usually get neglected and need to be looked at (they were instrumental in the US, Icelandic, Irish, Japanese, Spanish, and numerous other crises), the question is that we come to a point where the private debt stops contracting -- and at that point, has public debt peaked? If you're still running deficits, then it's a problem.

I see a lot of countries today that are growing healthily and yet still run deficits. India and China both run deficits, for example. While India may be slightly more justified by the need to increase investment for its poor population, I feel China should be running big surpluses to fortify the public balance sheet.
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