Friday, April 02, 2010

Japan is in so much debt

In connection with the new financial support for kids in Japan, yesterday I raised the issue that the money which will be used to generate the funds will be borne by the taxpayers, of course. Looking at the Figure below, it is understandable that Japan has one of the highest national debt as a percentage of the gross domestic product (GDP) in the world. This is supported by other sources (2009).

In this Figure, Japan is in so much debt, I have to pause how many zeros there are in a trillion. The country is spending much more than how much money it creates. As I understand, the debt is 170% of the GDP of Japan. In simpler terms, if a person makes $100 income per year, he actually spends $170.

With the declining population growth, less manpower for the generations to come, and vast amounts of money to spend for internal and external affairs, the Japanese government, its people, taxpayers, and all are in a great challenge. That is why I hope that those who will benefit from the extra monetary support that the government will lend should put them into good use. I rephrase my closing remarks yesterday, please do not kill the chicken that lays the golden egg.

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The national debt of countries represents how much money the government of that country owes. Like a household budget, national debt gets larger when a government spends more than it takes in. This can continue for years, or even decades. This budget deficit is the total amount of this debt that has grown over time, with interest charged adding significantly to the amount owed by the government.

The amount owed varies greatly with the amount of money a country generates, its population and how much its government spends. In Germany, the national debt is $1.79 trillion. This represents 62.6 percent of Germany’s gross domestic product, or GDP. In The U.K. the national debt is $42.2 trillion. This is 47.2 percent of the GDP of the U.K.
In Russia, the national debt is $151.3 billion. This is 6.8 percent of the Russian GDP. Italy owes a national debt of $1.89 trillion, or 103.7 percent of the Italian GDP. The national debt of France is $1.40 trillion. This is 67 percent of France’s GDP.
One of the highest levels of national debt relative to the country’s GDP can be found in Japan. The Japanese national debt is $7.47 trillion. This is 170.4 percent of the Japanese GDP. India has a national debt of $2.55 trillion. This debt is 78 percent of the GDP of India. Zimbabwe has a national debt of $472.51 billion. This level of national debt is 241.2 percent of Zimbabwe’s GDP.
In the Americas, The United States has a national debt of 8.68 trillion. In the U.S., this is 60.8 percent of the American GDP. The Canadian national debt is $814.26 billion. In Canada, the national debt is 62.3 percent of the GDP. In South America, Argentina has a national debt of $293.56 billion. The Argentinean national debt is 51 percent of the GDP of Argentina.
The gross domestic product of a country is the market value of all of the products and services that a country produces in one year. This includes spending that is done by the citizens of the country and by the government of that country. It includes the value of items produced within the county and exported elsewhere, but it does not include the value of any imported items. The GDP is the primary way to calculate the size and status of the economy of a country as a whole. It is calculated quarterly as well as yearly.
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