Compare Latvia and the US. Who has bigger problems?

Latvia auction flop sparks fears of struggle to find debt buyers

By David Oakley in London

Published: June 3 2009 19:13 | Last updated: June 4 2009 08:05

A failed Latvian government debt auction on Wednesday sent tremors across financial markets as investors feared that emerging nations round the world would struggle to find buyers for a huge wave of sovereign debt issuance.

Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, said: “The country is in a mess with the economy expected to contract very sharply this year, while the budget deficit is horribly high. Devaluation looks very likely as a way of boosting exports and growth.”

Latvia’s economy is forecast by the government to contract by 18 per cent this year, while its budget deficit is estimated at 9 per cent of gross domestic product.

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U.S. Budget Deficit
How bad is the U.S. budget deficit?

“President Obama’s 2009 budget calls for a deficit of $1.75 trillion, which would represent 12.3 percent of GDP, the highest percentage since World War II.”

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