Europe has a long three decades ahead of it.
Costs of the financial crisis and an expensive social welfare system will cause public sector debt to skyrocket, according to a report by the Bank for International Settlements. The most shocking estimates are for Britain, where interest payments on debt may hit 27% of GDP.
Ridiculous debt levels are coming — worse than the U.S. national debt and worse than the Greek debt.
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Government debt is going gangbusters across the developed world
Source: BIS
Europe faces an unprecedented aging crisis
Source: BIS
Age-related costs are increasing fast
Source: BIS
Italy — public debt approaching 250% GDP
Sign of the apocalypse: The big winner in recent elections was a right-wing anti-immigrant party that blames economic problems on gypsies.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Portugal — public debt approaching 270% GDP
Sign of the apocalypse: Greece’s deputy prime minister says: “You are the next victims … I hope it doesn’t happen and the solidarity prevails and we find an exit from this escalation (of borrowing costs). But if this does not happen, the next probable victim will be Portugal.”
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Austria — public debt approaching 300% GDP
Sign of the apocalypse: One out of two Austrians retire early with a disability pension, according to the OECD.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Spain — public debt approaching 300% GDP
Sign of the apocalypse: Spain’s unemployment stands at the EU-high of 18.8%.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Germany — public debt approaching 305% GDP
Sign of the apocalypse: The German economy contracted in Q1 and is heading toward a double-dip recession, says the OECD.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Ireland — public debt approaching 310% GDP
Sign of the apocalypse: A new bank bailout may cost up to €100 million, according to the Irish Times.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Netherlands — public debt approaching 400% GDP
Sign of the apocalypse: Only 44% of Dutch supported budget cuts, even as the government warns of a “Greek scenario” by the end of the decade, according to Reuters.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
France — public debt approaching 400% GDP
Sign of the apocalypse: The EU’s two largest economies are bickering, with French Finance Minister Christine Lagarde calling for Germany to spend more.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Greece — public debt approaching 410% GDP
Sign of the apocalypse: Greece is under increasing pressure today, and their 10-year bond spread against the German bund has reached an all time high of 453 bps. The euro is down .2% against the dollar.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
It’s not just Europe… USA — public debt approaching 430% GDP
Sign of the apocalypse: America is about to fall off the list of safest credit ratings.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
UK — public debt approaching 520% GDP
Sign of the apocalypse: Hung parliament is a growing possibility, which would shatter Britain’s hopes of dealing with the budget.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
Japan — public debt approaching 600% GDP
Sign of the apocalypse: Japan is eating the bluefin tuna out of existence.
red: baseline scenario
green: small gradual adjustment
blue: small gradual adjustment with age-related spending held constant
Source: BIS
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Image: AP
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