Economics Stack Exchange
Economics Stack Exchange

Questions tagged [debt]

An obligation to pay another party at some point in the future. Examples include national debt, corporate bonds, and household credit.

202 questions
14
votes
5 answers

Why do lenders dislike early loan repayments?

I've frequently seen references in blogs and articles about how banks and other lending agencies like to refer to people who repay loans on an accelerated schedule as "deadbeats", because they get less interest out of that person. Some institutions…
Mason Wheeler
  • 373
  • 3
  • 8
9
votes
4 answers

In the eyes of a normal citizen, what difference does it make if my country has debt or no debt?

I got curious about this because I happened to pass by a list of countries with zero debt. Country debt seems like a major thing, but for a non-economics major like me, I don't exactly understand the implications of a country having debt. More tax?…
Zaenille
  • 193
  • 2
9
votes
3 answers

What happens to a country with lot of debt?

As far as I know, debt is a way to get hands on extra money which will burden the future governments. What if every successive government keeps adding to the national debt? Isn't it like free money? You can win by developing the country and keep…
Yashas
  • 213
  • 1
  • 2
  • 6
3
votes
1 answer

When Does a Country's External Debt Become a Problem?

Here in the UK, the external debt is currently over 300% of GDP. To me this looks very worrying, using my basic financial logic, it seems like this debt will only go up (because of interest combined with the fact we don't have enough money to pay it…
Jalapeno
  • 133
  • 4
3
votes
0 answers

Economic effects of very large (>200%) household-debt-to-GDP-ratio in advanced economies

According to OECD figures, five OECD countries have houshold-debt-to-GDP ratios in excess of 200%: Denmark 292.0% Netherlands 277.1% Norway 221.8% Australia 211.8% Switzerland 211.2% Most of this is in mortgages, so for the sake of the…
gerrit
  • 1,754
  • 11
  • 26
3
votes
1 answer

Credit market debt is $200 trillion?

In a recent article by David Stockman he wrote: Credit market debt outstanding has soared from \$85 trillion to \$200 trillion. What is he talking about? What is the itemization of this debt. The whole US debt is less than \$20 trillion, so I…
Lassie Fair
  • 1,718
  • 1
  • 14
  • 18
2
votes
2 answers

How can a sovereign debt ratio be high, but debt-servicing ratio be low?

I'm quoting this May 22 2020 interview with NYU Stern Prof. Nouriel Roubini. In other words, you’re saying that because of structural weaknesses in the economy, even modest inflation would be crisis-inducing because key economic actors are…
user4020
2
votes
1 answer

How can countries be in so much debt?

You regularly hear in the media how countries are billions or even trillions of US dollars in debt. How does a country get so far in debt, and who is it in debt to? How can countries of the world operate owing such vast amounts of money?
Martin Bean
  • 121
  • 1
2
votes
0 answers

Is there a reliable estimate of what proportion of adults in a country are in debt at a given time?

Is there a reliable estimate of what proportion of adults in a given country are in debt at a given time? With "debt" covering student debt, debt secured by mortgages on property, credit card debt, etc.?
user11602
1
vote
2 answers

Is there any example of being in debt not being considered particularly bad?

I was thinking about how useful debt is, in contrast to a common sentiment that it’s a ball-and-chain to be avoided. Without credit, one can hit zero funds with no alternative. With credit, one can borrow from the future, and so even when real money…
Julius Hamilton
  • 149
  • 3
1
vote
0 answers

confusion regarding debt and debit

According to it's etymology, the term debit comes from the word debt, which means "the state of owing money.". Among other meanings, liability is a contractual obligation to deliver cash or another financial asset to another entity. Thus, debt…
Enk9456
  • 97
  • 5
1
vote
1 answer

How could DTI(debt-to-income ratio) go well above 1?

IMF Working Paper No. 19/258: Assessing Macro-Financial Risks of Household Debt in China (PDF version) The riskiness of household debt increased as well: between 2010 and 2016, the share of debt held by highly indebted households—with…
user3528438
  • 121
  • 2
1
vote
1 answer

How come debts is higher than assets?

Investopedia has a definition about Debt ratio, I do not understand how come Debt ratio can be higher than 1. Because it means that equity is negative (because Total Assets=Debt+Equity).
Phil Nguyen
  • 1,130
  • 3
  • 10
  • 27
1
vote
0 answers

External/Internal debt

https://www.bis.org/publ/work550.pdf page 7 extract "Third, the distinction between external and internal debt is important. External debt, long seen as a key driver of financial crises in EMEs (Al-Saffar et al (2013)), is more dangerous than…
Student
  • 111
  • 2
1
vote
1 answer

How can increasing debt boost potential returns?

May 26 2020. Why Even Carl Icahn Couldn't Save Hertz From Chapter 11 - Bloomberg Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co. in 2005; the new owners quickly took out a \$1 billion dividend. Piling on…
user4020
1
2