Must American Debt Mean the End of the World?

A friend posted on Facebook:

"US Closes 2010-2011 Fiscal Year With $14,790,340,328,557.15 In Debt, $95 Billion Jump On The Day, $1.2 Trillion Increase In One Year & that is excluding the EU southern member states debt! Could we even count that many stars in the night sky".


Someone else said:

"Many are not prepared for what's coming."

"...the person the anti-Christ I believe he is living right now....."

Some of my thoughts:

Allow me to introduce some comparative figures which may help to bring some perspective to America's situation:

Yes, America's external debt is about $14.8 trillion. It sounds extremely high - but EU's isn't far behind at $13.7 trillion.

Remember also that America creates an enormous amount of wealth each year. America's total external debt is actually only about 99% of its GDP - but Norway's debt stands at 141% of GDP; Germany's at 142%; Britain's is 400%; and Luxembourg's is 3,443%.

Our own debt in Australia stands at 95% of our GDP. Therefore America's debt as a percentage of GDP is really not too different to Australia's (only 4% higher) and is far lower than much of Europe's.

I just did a quick calculation - America's debt per capita - although its debt sounds huge - is actually less than $48,000 per person. By comparison, Germany's debt per capita is higher at nearly $58,000. France's debt per capita stands at $75,000. Britain's is over $144,000 per capita; and Luxembourg's debt per capita stands at nearly $3.8million.

Australia's debt per capita is over $52,000. That means America's debt per capita is actually nearly $4,000 lower than Australia's and far lower than much of Europe's.

America's debt per capita is actually $700 lower than its GDP per capita. Australia's debt per capita is nearly $12,000 higher than its GDP per capita, and the disparity between per capita debt and per capita GDP in much of Europe is even greater.

America's external debt situation in and of itself is actually therefore better than Australia's and siginificantly better than much of Europe's. It's just that the American media is more alarmist about its own situation than our media in Australia is about our situation - because that's the nature of free-speech in America. I love it that American society is so alert and so vocal about signs of potential danger - nevertheless, the reality is that America is still in a better position than most strong economies around the world.

The nature of free-speech in America means that much of the criticism of America comes from within America itself. But that's not necessarily a reflection of America's latent strength and unity.

Having said that, wisely managing debt of course is an important issue. Australia's situation was far better under the previous Coalition government than under Labor. America could experience consequences more serious than many are imagining if it doesn't return to more-conservative fiscal management - and perhaps experience another spiritual awakening. But the cause of the problem was not capitalism, and therefore the solution will not be socialism - and it wouldn't necessarily mean the end of the world.

Socialists and end-time pundits take note. And may God bless America.