united states has the most debt in the world.
united states has the most debt in the world.
who has the most debt in the world?
united states
by mid-january 2017, the bond debt had reached $70 billion, in a territory with a 45 percent poverty rate and a double digit unemployment (12.4%, december 2016), more than twice the mainland u.s. average. the debt had been increasing during a decade-long recession. the commonwealth defaulted on many debts, including bonds, since 2015. by mid-january, the cash-strapped government was having difficulty maintaining health care funding. "without action before april, puerto rico's ability to execute contracts for fiscal year 2018 with its managed care organizations will be threatened, thereby putting at risk beginning july 1, 2017 the health care of up to 900,000 poor u.s. citizens living in puerto rico," according to a letter sent to congress by the secretary of the treasury and the secretary of health and human services. they also said that "congress must enact measures recommended by both republicans and democrats that fix puerto rico's inequitable health care financing structure and promote sustained economic growth." in january 2017, newly elected governor ricardo rosselló entered office expecting a $3 billion budget deficit, only to discover the deficit was actually $7.5 billion. he proposed austerity measures cutting payments to government pensioners, who do not receive social security, by 10%, prompting criticism from the island's chapter of the service employees international union. governor rosselló discussed the situation in an interview with the international financial times in january and indicated that he would seek an amicable resolution with creditors and also make fiscal reforms. "there will be real fiscal oversight and we are willing to sit down. we are taking steps to make bold reforms. ... what we are asking for is runway to establish these reforms and have washington recognize that they have a role to play." he had instructed puerto rican government agencies to cut operating expenses by 10 percent and reduce political appointees by 20 percent. with debt payments due, he faced the risk of a government shutdown. initially, the oversight board created under promesa called for puerto rico's governor to deliver a fiscal turnaround plan by january 28. puerto rico must reach restructuring deals with its creditors to avoid a bankruptcy-like process under promesa. in late january 2017, the control board extended the deadline it gave the government to february 28 to present a fiscal plan which including negotiations with creditors for restructuring debt. a moratorium on lawsuits by debtors was extended to may 31. governor rosselló hired investment expert rothschild & co in january 2017 to assist in convincing creditors to take deeper losses on puerto rico's debts than they had publicly expected. according to reliable sources, the company also explored the possibility of convincing insurers that had guaranteed some of the bonds against default to contribute more to the restructuring. the governor also planned to negotiate restructuring of about $9 billion of electric utility debt, a plan that could result "in a showdown with insurers". political observers suggest that his negotiation of the electrical utility debt indicated rosselló's intention to take a harder line with creditors. puerto rico has received authority from the federal government to reduce its debt with legal action and this may make creditors more willing to negotiate instead of becoming embroiled in a long and costly legal battle. in late january, the oversight board set up under promesa gave the commonwealth until february 28 to present a fiscal plan (including negotiations with creditors) to solve the problems. by the end of february the oversight board's plan with its focus on repayment of debts was criticized by economists joseph e. stiglitz and martin guzman positing that the board lacks "any understanding of basic economics and democratic accountability". with the board's focus on debt service leading to a predicted 16.2% decline in gross national income for the next fiscal year with a further decline expected, "a social [and] economic catastrophe" would be "all but guarantee[d]". stieglitz and guzman were proposing that steps to enhance economic growth and not repayments should be at center of a viable plan to solve the crisis. similarly, an internal survey conducted by the puerto rican economists association revealed that the majority of puerto rican economists reject the policy recommendations of the board and the rosselló government on similar grounds. owners of the commonwealth's general obligation bonds, which are protected by the island's constitution, and puerto rico sales tax revenue bonds, which are paid directly into a trust rather than the commonwealth's treasury, are in conflict over who holds the senior debt. in march 2017, governor rosselló was given permission from the oversight board to offer the creditors a plan that would repay less than a quarter of debts. on may day protests residents angry about the governor's proposed subsidy cuts shouted: "ricky is selling the island!" as soon as a court stay expired on may 2, 2017, bondholders and a bond insurer sued the commonwealth for full and timely debt repayment. on may 3, governor rosselló reacted by asking the oversight board to file in federal district court for debt relief under promesa, proceedings which will be very similar to bankruptcy. on may 5, chief justice john roberts assigned the case to judge laura taylor swain of the united states district court for the southern district of new york. that day, the puerto rico department of education announced plans to close 184 schools. on may 17, 2017, judge swain traveled to san juan for the first day of hearings, where she ultimately agreed to allow the oversight board and the commonwealth to pursue separate lawsuits at the same time in a joint adjudication. on july 2, 2017, the puerto rico electric power authority filed for bankruptcy protections under promesa for its $9 billion in bond debt. on august 7, 2017, aurelius capital management had theodore olson file another lawsuit, now alleging that the selection of the oversight board violated the appointments clause of the u.s. constitution. after touring the damage from hurricane maria on october 3, 2017, president donald trump announced: "they owe a lot of money to your friends on wall street. we're going to have to wipe that out." when markets opened the next day the price on the commonwealth's general obligation bonds dropped to all-time lows of 32 cents on the dollar. mick mulvaney, the white house director of the office of management and budget, then said that the president should not be taken literally and clarified that "[w]e are not going to bail them out". the commonwealth's $123 billion liabilities from debt ($74 billion) and unfunded pension obligations ($49 billion) are much larger than the $18 billion detroit bankruptcy, the recordholder for municipal bankruptcies conducted under chapter 9. the debt restructuring procedure will also be unprecedented in that it is governed by title iii of promesa instead of chapter 9 of the u.s. bankruptcy code.
puerto rican government-debt crisis
another popular iteration of the ratio is the long-term-debt-to-equity ratio which uses only long-term debt in the numerator instead of total debt or total liabilities. total debt includes both long-term debt and short-term debt which is made up of actual short-term debt that has actual short-term maturities and also the portion of long-term debt that has become short-term in the current period because it is now nearing maturity. this second classification of short-term debt is carved out of long-term debt and is reclassified as a current liability called "current portion of long-term debt" (or a similar name). the remaining long-term debt is used in the numerator of the long-term-debt-to-equity ratio.
debt-to-equity ratio