Take a look at the table above. I have extracted the 2009 figures for budget deficit (in USD) and took the percentage to the GDP of various countries. The figures are taken from Wikipedia and ...
...The current perception is that US is taking on too much debt, an amount that it may not be able to repay. Kenneth Fisher suggested we should not blindly follow the general perception, and we should investigate to find the truth.
Just like personal finance, we determine our debt level by comparing between liabilities and assets that we have. The standard debt to asset ratio is 35%. Likewise for businesses, we look at the debt to asset ratio and benchmark to the industry to determine any over-borrowing. As such, can we extend this evaluation to countries? This is what Kenneth Fisher suggests – look at the ratio between budget deficit and Gross Domestic Product (GDP).
