There's no two ways about it.
is a serious problem worldwide. And as we've seen, most countries
have thus far lacked the political will to deal with the
But at some point,
takes over and forces governments, politicians and citizens to
bring debt ratios back into line. Unfortunately, that often only
happens via recession, default and occasional civil unrest.
The worrisome expansion of sovereign debt in the United States
and the recent sovereign debt crisis in some European countries
raises the question, what countries have the most debt relative to
gross domestic product (
What may surprise you is the 11 countries with the highest
debt-to-GDP ratio are in Europe, but the U.S. barely cracks the top
15. While it seems that the European sovereign debt crisis has
passed for now, the size of the debt for these countries warns that
it will return unless there are significant growth and debt payment
For a number of years Ireland was one of the fastest growing
countries in Europe. Then along came the bust in housing, and the
growth bubble burst. With a debt-to-GDP ratio of 997%, Ireland will
most likely spend many years struggling to reduce their debt and
generate real growth.
Seeing Switzerland so high on the list may be a bit of a surprise.
After all, Switzerland is known around the globe as a bastion of
financial conservatism. Yet the Swiss have accumulated a
debt-to-GDP ratio of over 400%.
The United States finds itself in middle ground here. While we have
the world's largest debt load , we also still have the world's
. If we can slow the debt explosion, we may still have room to
maneuver and grow. On the other hand should we continue to expand
debt at its current and projected rate, we could face years of
slower growth as our overwhelming debt consumes capital and
To learn more about the possible devastating side-effects of
sovereign debt overload, see our popular article
Crisis In Greece: Why This Is Your Problem, Too
. And if you want some perspective on exactly how big a $1 trillion
debt is, take a look at
What the U.S. National Debt Should Mean to You