# Who is owed all the money?



## Tinker Bell (14 May 2010)

Considering that all the major countries in Europe owe money, who do they owe it to? The US, Australia and other non EU countries are also heavily in hock.


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## dogfish (14 May 2010)

Everyone who has a pension fund.  The banks use government bond a "secure" way to keep savers money.  Post office bonds.  A wide range of other sources.


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## Tinker Bell (17 May 2010)

But we're talking billions/trillions!


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## jpd (17 May 2010)

pension funds are worth billions


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## Tinker Bell (17 May 2010)

Yes, but if we are borrowing from abroad who's borrowing from us? And why?


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## Frank (17 May 2010)

The worlds savers CHINA. Own most of the world debt.


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## Protocol (18 May 2010)

For the past few years we have been a borrowing nation, as we have spent/consumed more than the value of our output/income.

Example: we produce output/income of 150bn, but we as a nation spend 160bn.

So we must borrow 10 bn from abroad.  This is known as a deficit on the Balance of Payments.

See here for data:

[broken link removed]

[broken link removed]

Other nations produce more than they consume/spend, so the are savers, and they lend us their excess savings.

By this I don't mean that Govts lend to Govts, as it doesn't work like that.


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## jpd (18 May 2010)

Protocol said:


> By this I don't mean that Govts lend to Govts, as it doesn't work like that.



It does in a roundabout way, as in recent years we have sold bonds to foreign banks and then they have to be propped up by their government.


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## Duke of Marmalade (18 May 2010)

Protocol said:


> Example: we produce output/income of 150bn, but we as a nation spend 160bn.
> 
> So we must borrow 10 bn from abroad. This is known as a deficit on the Balance of Payments.
> 
> ...


Those are very interesting stats but very difficult to interpret. Note that on the combination of merchandise (goods) and services we are well in the black. What puts us in the red are the large profit repatriations (reported as negative Income). Both could be very misleading due to transfer pricing by multinationals. The negative balance is more likely financed by multinationals repatriating accrued surpluses rather than actual borrowing from abroad.


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