This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Comparing Empires: A Tale of Four Countries

NEW YORK ( TheStreet) -- Working overseas and doing research on countries, I have always noticed striking differences and what explains them. Here, I look at four countries: China, Greece, Japan, and the U.S.

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

Source: IMF

Government Deficits

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

Source: IMF

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.

So look at Table 3, below. It gives both current account data (a slightly more complete picture of a countries' international transactions than just the trade balance) and balance sheets (assets and liabilities in billions of U.S. dollars). Things are now a bit clearer.

Table 3. - International Transactions and Balance Sheets, 2011

Source: IMF

These data go at least part of the way to explain why Greece is having serious "survival" problems while Japan is not. Greece is running a large international transactions deficit while Japan is running a surplus. Greece does not have its own currency, so deficits reduce its money supply. Also, Greece's liabilities exceed its assets. Japan is quite different. It has a trade surplus and balance sheet with a $3 trillion balance.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.38 -0.84%
FB $117.91 0.41%
GOOG $697.33 0.72%
TSLA $222.72 -4.10%
YHOO $35.98 -0.08%


Chart of I:DJI
DOW 17,651.16 -99.75 -0.56%
S&P 500 2,048.79 -14.58 -0.71%
NASDAQ 4,721.7940 -41.43 -0.87%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs