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Which country is the world's wealthiest? When asked this question, economists generally refer to gross domestic product per capita. By this measure, according to the IMF, the top eight for 2010 are Luxemburg, Norway, Qatar, Switzerland, Denmark, Australia, Sweden and United Arab Emirates. The U.S. ranks ninth, the Netherlands 10th and Canada 11th.

But does GDP per capita really measure the wealth of a country? Think about it in personal terms: What if your income ranked among the top tier in the country, but your debt also ranked among the highest? Would you be "wealthy"? Not if your debt were so large that, even with your high income, you have no hope of ever paying it off. Similarly, GDP per capita is an income measure that says nothing about a country's balance sheet.

With the help of The Economist magazine's website, let's take another look at the balance sheets of those 11 countries on the basis of public debt per capita, a much more telling measure of wealth. Americans bear a public debt burden of $31,000 (U.S.) per person while citizens of the Netherlands, Switzerland, and Denmark bear about $25,000; Luxemburg, Sweden and Canada about $17,000 (Canadians' share of public debt more than doubles if provincial debt is included). Australians bear only $11,400.

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On the other hand, the citizens' share of the public balance sheet in three of the 11 countries is positive. Norway has a gross debt of $186-billion, but it has a sovereign wealth fund that the Las Vegas-based Sovereign Wealth Fund Institute values at $512-billion, for a net worth of $326-billion, or $66,500 per capita. Qatar's public debt is $13-billion, but its SWF is valued at $85-billion, for a net worth of $72-billion or $42,500 per capita.

The UAE, nominally considered one country, is a loose federation of seven emirates which are, for practical purposes, independent states. Some are quite poor and one, the ostentatious Emirate of Dubai, is heavily indebted. Then there is oil-rich Abu Dhabi, which has almost no debt and the world's biggest SWF, the $627-billion Abu Dhabi Investment Authority. Abu Dhabi has a population of 1.6 million, of whom 75 per cent are migrant workers without citizenship rights. This means the net-asset value of Abu Dhabi's public purse amounts to a staggering $1,567,000 per citizen. So there's no doubt that this tiny state is the wealthiest in the world.

But there is much more to the sovereign wealth story. Consider:

- China's four big SWFs are valued at $831-billion, nearly offsetting the country's national debt of $996-billion. The U.S. national debt is $10-trillion, with no SWF.

- Singapore's two SWFs are worth $381-billion, almost twice its public debt.

- Saudi Arabia's SWF is worth $444-billion, seven times its public debt.

- Hong Kong's SWF is $259-billion, six times its public debt.

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- Kuwait's SWF is worth $203-billion, 20 times public debt.

- Russia's SWF of $142-billion almost equals its public debt.

The Economist's debt clock currently shows global public debt topping $41-trillion, up more than $10-trillion from 2008. Almost all of that is owed by the developed world, with an increasing portion owed to the developing world. At 70 per cent of GDP, the average public debt of developed countries is 50-per-cent higher than just three years ago. Calculations by the Institute of International Finance show that the U.S. Treasury needs to raise a staggering $4-trillion in 2011, while European governments need to find buyers for $3-trillion in new debt securities. Japan, meanwhile, needs to raise $5-trillion this year.

Sovereign bond markets were volatile in 2010, but this year promises to be even more nerve-wracking. Expect sovereign bond yields to keep climbing, so indebted economies will need to borrow even more to pay the interest. An analysis by the Bank of International Settlements estimated the debt-to-GDP ratios of the U.S. and Britain would more than quadruple by 2040, while that of Japan, Germany and France would triple.

Halting the debt-to-death march will require painful spending cutbacks that will profoundly impact social programs. Continuing the march will result in even more pain, because chronic debtors lose the right to make choices. One thing is certain: The "wealthy" nations aren't who they used to be, and won't ever be again.

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