Through this (approximately) one minute animation, I have referred to the three main types of debt levels a country has: household debt, national (aka public/sovereign) debt and corporate debt. The examples mentioned in the video should make it clear that when making statements about how indebted a country is or isn't, it usually helps to be specific.
In our examples, it has been explained that Japan for example has a greater public debt level as a percentage of its GDP than China and the same principle is valid when it comes to household debt. On the other hand, China's corporate debt as a percentage of the GDP is higher than Japan's.
As can be seen, we are not just dealing with subtle nuances here. Time and time again, so-called experts end up not being able to get the message they have in mind across properly due to not having a firm grasp on terminology. They say "country A has more debt than country B" without mentioning the type of debt they have in mind and that is just plain wrong because a lot of times, individual debt level types paint completely different pictures :)
0 Comments