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Catching the Debt Bug
New data shows that some emerging economies are as hooked on credit as the U.S. is.
The credit addiction that once seemed to be a very American phenomenon has spread around the world. In the West, Ireland, the U.K. and most of Scandinavia have significantly higher credit-to-GDP ratios than the U.S., while much of emerging Asia is fast reaching American debt levels. U.S. household credit, where excesses triggered the crisis, has dropped by more than 15 percentage points, to barely 80 percent of GDP, while in Australia the comparable figure is more than 100 percent of GDP. Nonfinancial companies in the U.S. have also tightened their belts, while their South Korean counterparts have higher, and rising, debt. The data doesn’t scream crisis, but it does bear watching.