The IMF puts Greece’s debt/GDP ratio at 130/100, approaching the red zone, yes, but a country should not be on life support with this kind of ratio. In the past, ratios of 120/100 were considered a mere warning and not a serious threat to default. Nevertheless, Greece is being squeezed, interest rates on its bonds are soaring and the country is on the verge of bankruptcy. (All figures are for 2010).
Sculptures from the Temple of Zeus. Priceless. Would really look great in a billionaire’s collection.
Italy’s debt to GDP is 118/100 – definitely not in the red zone of default by past yardsticks.
Spain, Portugal and the United States have debt ratios below 100%. Yet the economies of these countries are considered to be on the verge of crisis.
Japan’s ratio is 226/100 – currently the highest in the world. While Japan’s economy is stagnant like all others, investors consider the yen a safe investment and are still buying. And Japan’s bonds are selling at record low interest rates.
So what’s going on?
Who will own the Colosseum in the future? (Courtesy of Andreas Tille. Click photo for link).