True, but it is a combination of factors. The sheer magnitude of...

True, but it is a combination of factors.

The sheer magnitude of US foreign debt make it the biggest debtor nation in this category (and the payments to service this are equally large), although broken down as a percentage of GDP there are other nations that are greater, such as the UK.

However, US GDP was made up of over 70 percent consumer spending, which is now dropping (some have said that the GDP was phony). Given the low savings rates and the fact that this has been financed recently by higher levels of easy credit the figures in the US will only worsen (however AUS/UK are not that flash as well).

Looking at the level of US public debt I think this was conservatively estimated at around 60 percent in 2007, but with the recent govt spending is most likely to be over 75 percent. However some analysts estimated the level of bailouts and guarantees approved by the US to be closer to $8 trillion, which would make public debt as a percentage of GDP much higher (well over 100 percent). From memory Japan use to have the highest public debt per GDP in the world at just over 100 percent, but practically none of this was foreign and the rates payable were extremely low making it easy to service, while private savings are very large. Anyway, with another $850 billion in spending and potentially another $2 trillion for a bad bank scheme all of the numbers for the US will get significantly worse.

On a side note, my cousin just got back from a trip to California and said there are a lot of retail stores everywhere now closed down. That ties in with a trip my Uncle took in June where he was amazed at the number of bank branches that were actually boarded up.

However, my cousin also runs a business from China and said its like a bomb has gone off in his area (just over the border of HK) with all the factories shutting down and many of the people disappearing (a lot would get housing with their factory).

Interesting times.

Cheers
SBC