By Dr. Steve Sjuggerud
Tuesday, December 11, 2012
In Spain, the unemployment rate for those under age 25 is 56%. In Greece, it's 57%. What happens when you have hundreds of thousands of unemployed youths? They protest... sometimes violently.
Could the U.S. end up like Greece and Spain? Unfortunately, the answer is yes.
How does a country end up with high unemployment? It's Economics 101...
When you run up big debts that you can't afford, the borrowing costs in your country go up. Studies show that higher debt loads are a drag on economic growth. Higher borrowing costs and lower economic growth lead to higher unemployment.
You can see it happening around the world:
Country
|
Debt-to-GDP
|
Unemployment Rate
|
Hong Kong
|
10%
|
3.4%
|
Australia
|
30%
|
5.2%
|
Switzerland
|
39%
|
3.0%
|
United States
|
72%
|
7.7%
|
European Union
|
82%
|
11.7%
|
Spain's debt-to-GDP (gross domestic product) ratio should end 2012 at 85%. By comparison, the official federal debt-to-GDP ratio in the U.S. is currently 72%.
Read more from Dr. Steve Sjuggerud's DAILY WEALTH.
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