As for the rest of the world, it is far worse than it looks.
Last night the Societe Generale economics research team put out a frightening estimate of the real liabilities of western governments – including off balance sheet debts.
In every case the off-balance sheet numbers – including unfunded pension fund liabilities – dwarf the official debt position.
Greece is by far the worst because of what Otmar Issing, the German former chief economist of the European Central Bank, described yesterday as “one of the most luxurious pension systems in the world”. Its total net liabilities are about 800 per cent of GDP – eight times the official position.
Here are Soc Gen’s figures for the others (per cent of GDP): US 550, UK 400, Germany 400, France 550, Italy 350 and Spain 250.
In other words, the entire western world is insolvent and each country is facing its own day of reckoning – starting, appropriately enough, in Greece, the place where western civilization itself began.
Alan Kohler