USA Today has an interesting (somewhat alarmist) article on the US government debt problems at:
I recall that when the Labour government came to power in New Zealand in 1984, the first thing they did was stage an "opening the books" exercise to convince people the country was massively in debt, and that they had to "tighten their belts". In turn this provided the backdrop for a radical privatisation and austerity policy.
The total debt burden of New Zealand, (the "neoliberal exemplar", resident population now 4 million people) hasn't decreased though, it has increased, but the difference is that the bulk of it is now private sector debt (households and business).
At the beginning of the 1990s, corporate external debt was roughly twice government external debt, now it is nearly eight times the government external debt. Aspects of the current New Zealand debt structure, after a Chile-type radical marketisation policy, can be summarised as follows (round figures):
GDP US$86 billion (ppp)
Central government external debt US$11 billion
Corporate external debt US$82 billion
Household debt $53 billion (an average US$41,000 for every household, 90% of which is mortgage debt)
(local government net debt does not appear to be very significant)
The disposable annual income of the average New Zealand worker is now said to be around US$19,000. By the end of 1999, household debt had risen to a point where it was about 114 per cent of household disposable income. At that time, the average household would have needed about 14 months' of income to pay off all its debts. In 1984, the year that the neoliberal programme began, the average debt-to-income ratio for households was only half as high..
So the end result of the "belt-tightening" marketisation policy is that households are on average now twice as much in the hock as before, which income disparities have grown strongly. The average Maori or Pacific Islander residents earn between two-thirds and three-quarters of the average wage.
According to USA Today, the average personal debt of each American household is $84,454 but the average disposable income per fulltime American worker would be more like $30,000.
Even so, the average debt-to-income ratio for all American households is worse than in New Zealand - and Americans haven't yet had a radical austerity policy !
Jurriaan
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