There’s been some buzz in the markets lately, concerning the health of America’s sovereign debt. The nation owes other countries about USD 5,7 trillion, and about 3 trillion is due this year. Investors are worried that the US won’t be able to borrow much more, at least not to the same low price, and that big buyers of US Treasuries, like China and Russia, may start dumping their bonds to put USA in a financial squeeze. Well, I wouldn’t worry too much. You see, most countries who are lending money to the American government are receiving huge loans from US banks. The next victim of the debt crisis is probably not USA, nor the EU.
“Claims on advanced economies contracted by $342 billion between end-December 2012 and end-March 2013, mostly due to reduced claims on banks and related offices. This marked the sixth consecutive quarterly decline in interbank positions on advanced economies and brought the cumulative reduction since end-September 2011 to $1.9 trillion. In contrast, claims on borrowers in emerging economies increased by $265 billion between end-December 2012 and end-March 2013.”
Bank of International Settlements – BIS
The Bank of International Settlements (BIS) recently realised new data and statistics on global debt, an interesting oversight on who-owes-who in a world ridden by fear of economic collapse and social unrest. The numbers reveal a picture slightly different from what most people see.
F.ex: European countries owe foreign nations twice as much as the United Nations
owe others. And there seem to be several groups of nations, connected through the same banks, but for some reason it is not the countries with the largest debt who are in most trouble.
We already know the US numbers, and the Americans owe most of the money to themselves, anyway… (Federal Reserve, that is.). The 5,7 trillion debt to foreign countries is a relatively small sum compared to the grand total of about 14 trillion.
Elsewhere, the sovereign debt, with all its derivatives, represent a much higher risk.
Europe’s Fab Four
Consolidated foreign claims of 24 reporting banks – immediate borrower basis.
United Kingdom – USD 3,2 trillion.
Germany – USD 1,8 trillion.
France – USD 1,6 trillion
Netherlands – USD 1,9 trillion.
And who do they borrow from?
- Other EU bank: 1,5 trillion.
- France: 200.200 million.
- Australia: 121.577 million.
- Canada: 102.963 million.
- Other EU banks: 1,1 trillion.
- France: 198.000 million.
- Austria: 37,914 million.
- Canada: 23.838 million.
- Other EU banks: 714,235 million.
- Canada: 24,612 million.
- Belgium: 23,536 million.
- Austria: 13,442 million.
- Other EU banks: 577,427 million.
- France: 156,857 million.
- Belgium: 22,746 million.
- Canada: 13,722 million.
And who have most money outstanding?
- United Kingdom – USD 2,6 trillion.
- Germany – USD 1,5 trillion.
- France – USD 1,2 trillion.
- Netherlands – USD 0,8 trillion.
Is there a pattern here?….somewhere?
The BIS writes:
“The latest international banking statistics show diverging trends in credit to advanced economies and emerging markets. Claims on advanced economies contracted by $342 billion between end-December 2012 and end-March 2013, mostly due to reduced claims on banks and related offices. This marked the sixth consecutive quarterly decline in interbank positions on advanced economies and brought the cumulative reduction since end-September 2011 to $1.9 trillion. In contrast, claims on borrowers in emerging economies increased by $265 billion between end-December 2012 and end-March 2013. The expansion was driven mostly by credit to emerging economies in Asia, especially China. In recent years, BIS reporting banks’ exposure to Asian credit risk has increased even more rapidly than their lending to Asian borrowers because lending has been accompanied by a reduction in net credit risk transfers out of the region.”
That means we now have a USD 30 trillion (+) debt bubble in transit between different parts of the world! (At the same time the richest people in the world has more than 20 trillion stacked away in places like Claman Island to avoid taxes.).
The Asians now owe other countries – mostly European – close to USD 2 trillion, with China‘s debt closing in on USD 600,000 million.
The rest is as follows:
South Korea: 309,363 million,
India: 304,920 million.
Chinese Taipei: 161,404
Malaysia: 155,500 million
Thailand: 102,299 million
Indonesia: 100,770 million.
Statistics at end-March 2013 are preliminary and subject to change.
Data are available on the BIS website, via the BIS WebStats query tool, or in a single PDF indetailed annex tables. Developments in the latest data are highlighted in the Statistical release.
Revised data and an analysis of recent trends will be released in conjunction with the forthcoming BIS Quarterly Review, to be published on 16 September 2013. Data at end-June 2013 will be released no later than 23 October 2013.