The Economist’s latest debt clock, highlighted by Lawrence earlier today, makes it clear that while the US debt is a huge problem, most of the industrialized world sits in a similar boat.
According to The Economist’s 2010 forecast data, the USA’s debt to GDP ratio will indeed be high, though it will be similar to that of Canada, Spain, the UK, and Germany. It will be lower than that of France, Italy, and Japan.
Thus while the increase in US debt over the last decade has been dramatic (thanks to two wars and lots of stimulus), on a relative basis to other countries the US is still manageable. This doesn’t mean that the debt shouldn’t be reduced. It should be. It is also surely a long-term problem. It’s just that debt hysteria is unwarranted and unproductive at this stage. The country remains one of the most stable places in the world, especially once you factor in its established democratic system, economic dominance, powerful military, and natural resources. The country won’t be losing its safe-haven status any time soon, and its best days are still ahead.