japan public debt 170 percent of gdp, page-8

so if the economy sinks private debt will suffer esp if overseas banks pull out, public debt can be expanded, good move by rudd increase public debt to reduce private debt or stimulate spending. Stimulate a recovery, tax collections will reduce deficit amounts later on especially corparations tax in a recovery, id say tresaury has done all the modellling it is actually a smart move, some tax cuts would help in med term tho