i would also add that its just not about government debt but the...

i would also add that its just not about government debt but the inter relationship between government and private debt. In Spains case for instance the government were good managers (better than Germany), what happened though in Spain(like Australia) was that private debt got out of control, eventually this meant the private economy collapsed, which in turn meant there was less government revenue coming form taxes , which in turn made what had been previously a sustainable government debt into an unsustainable one.

This idea that government spending is the entifre problem is nonsense, a friend of mine Thomas Catan wrote a good summary in the WSJ the other day

http://online.wsj.com/article/SB10001424052970203501304577088221198128632.html?KEYWORDS=THOMAS+CATAN

The real and present danger that the Australian government faces in the next 18 months is that we may do a Spain, that is the government budget situation might collapse from the incomes side and not the debt side, if exports collapse then government revenues to pay for the budget will collapse cause the government to borrow the difference.

It may become impossible for the government to balance the budget (no matter what party is in power)because they cant cut expenditure as fast as its income collapses and costs like the dole rises due to rising unemployment.

To a great extent this is what has happened in California, tax income falls dramatically over a short period of time creating a crisis in a very short period. its not just about government borrowing to much , its also about the private sector expanding to the point its unsustainable, which in turn collapses, leaving the government with much lower tax revenue, trying to service the same debt