Comparing Empires: A Tale of Four Countries
I chose these four for specific reasons: The U.S. is the aging empire. In the '70s, it was thought Japan would be next, but China is now is expected to succeed the U.S. I selected Greece because it has been in the news recently, along with other reasons.
Let's start by looking at a few common yardsticks for economic well-being.
Consider first government debt. In its reports on Greece, the IMF has said repeatedly that a debt-to-GDP ratio of 160% cannot be sustained. And indeed, the primary purpose of the "haircut" forced on its private sector creditors was to lower Greece's debt ratio. Look at Table 1. It provides the debt-to-GDP ratios for our four countries. Japan -- is that a typo? No. Japan has a debt ratio far higher than Greece. China's debt is low - No. 132 out of 164 countries. More on this later.
Table 1. - Government Debt-to-GDP Ratios, 2011
There is much concern about the size of government deficits and the tradeoffs between stimulus and austerity. How do our countries stack up on this measure?
Table 2. - Government Deficits-to-GDP Ratios, 2011
Once again, Japan leads, with the U.S. just behind. Greece doesn't look so bad. But what goes with Japan? Nobody is talking about a Japanese bankruptcy.
Current Account and Balance Sheet
If a country's exports exceed its imports, maybe it can build up enough reserves so as to "neutralize" large government debts/deficits.