“External debt is more worrisome and important than public debt, as public debt is generally recycled back into the economy,” says Josh Bivens, Economist at the Economic Policy Institute who has studied the long-term trends of national debt positions.

This means with Australian government debt, a majority of interest payments go to Aussies and money stays within the country.

External debt however, represents real leakage out of Australia and is money that we will not have because it was borrowed in the past

Public debt is hard to say which generation is being particularly harmed… however,  external debt, is pretty clear cut; you’re giving away future income to support today’s standard of living. You can’t say that about public debt.”

But who is it that should be concerned?

According to Bivens, it is the residents of the country first and foremost that should be most concerned. A massive external debt could possibly trigger an exchange rate devaluation, especially if a country relies heavily on imports. This creates a situation where money will be more difficult to tax in the future, debts will be more difficult to repay with less valuable currency and issues of fiscal sustainability arise.

But of course Australia is safe, isn’t it?  I mean the Government is so focused on bringing the budget back to surplus, our debt level isn’t any concern is it, well is it?

As Gillard and Swan won’t answer this and Hockey has been tripping over his tongue and is not addressing this I thought I should, because it is the most important item on the economic agenda really, not the budget surplus for goodness sake.  In fact I would expect a balanced budget, not a surplus, but that is another article.

I list CBN’s 20 of The World’s Biggest Debtor Nations updated 13 March 2012

  1. Ireland: 1,239%
    External debt (as % of GDP): 1,239%
    Gross external debt: $2.26 trillion
    2011 GDP (est.): $182.1 billion
    External debt per capita: $478,087
  2. United Kingdom: 451.4%
    External debt (as % of GDP): 451.4%
    Gross external debt: $10.157 trillion
    2011 GDP (est.): $2.250 trillion
    External debt per capita: $161,110
  3. Switzerland: 391.3%
    External debt (as % of GDP): 391.3%
    Gross external debt: $1.332 trillion
    2011 GDP (est.): $340.5 billion
    External debt per capita: $174,022
  4. Netherlands: 367%
    External debt (as % of GDP): 367%
    Gross external debt: $2.590 trillion
    2011 GDP (est.): $705.7 billion
    External debt per capita: $154,820

  5. Belgium: 353.7%
    External debt (as % of GDP): 353.7%
    Gross external debt: $1.457 trillion
    2011 GDP (est.): $412 billion
    External debt per capita: $139,613

  6. Denmark: 283.2%
    External debt (as % of GDP): 283.2%
    Gross external debt: $591.4 billion
    2011 GDP (est.): $208.8 billion
    External debt per capita: $106,680

  7. Hong Kong: 265.7%
    External debt (as % of GDP): 265.7%
    Gross external debt: $939.83 billion
    2011 GDP (est.): $353.7 billion
    External debt per capita: $131,380

  8. Sweden: 262.3%
    External debt (as % of GDP): 262.3%
    Gross external debt: $995.2 trillion
    2011 GDP (est.): $379.4 billion
    External debt per capita: $109,318
  9. France: 254.4%
    External debt (as % of GDP): 254.4%
    Gross external debt: $5.632 trillion
    2011 GDP (est.): $2.21 trillion
    External debt per capita: $85,824

  10. Norway: 246.9%
    External debt (as % of GDP): 246.9%
    Gross external debt: $653.29 billion
    2011 GDP (est.): $264.5 billion
    External debt per capita: $138,783

  11. Finland: 244.8%
    External debt (as % of GDP): 244.8%
    Gross external debt: $478.84 billion
    2011 GDP (est.): $195.6 billion
    External debt per capita: $90,984

  12. Austria: 241.3%
    External debt (as % of GDP): 241.3%
    Gross external debt: $847.95 billion
    2011 GDP (est.): $351.4 billion
    External debt per capita: $103,160

  13. Portugal: 207.3%
    External debt (as % of GDP): 207.3%
    Gross external debt: $511.94 billion
    2011 GDP (est.): $246.9 billion
    External debt per capita: $47,483

  14. Germany: 183.9%
    External debt (as % of GDP): 183.9%
    Gross external debt: $5.674 trillion
    2011 GDP (est.): $3.085 trillion
    External debt per capita: $69,788

  15. Greece: 178.9%
    External debt (as % of GDP): 178.9%
    Gross external debt: $546.92 billion
    2011 GDP (est.): $305.6 billion
    External debt per capita: $50,792

  16. Spain: 169.5%
    External debt (as % of GDP): 169.5%
    Gross external debt: $2.392 trillion
    2011 GDP (est.): $1.411 trillion
    External debt per capita: $50,868

  17. Australia: 139.9%
    External debt (as % of GDP): 139.9%
    Gross external debt: $1.283 trillion
    2011 GDP (est.): $917.7 billion
    External debt per capita: $58,322

  18. Italy: 136.6%
    External debt (as % of GDP): 136.6%
    Gross external debt: $2.494 trillion
    2011 GDP (est.): $1.826 trillion
    External debt per capita: $40,724

  19. Hungary: 110.3%
    External debt (as % of GDP): 110.3%
    Gross external debt: $216.16 billion
    2011 GDP (est.): $195.9 billion
    External debt per capita: $21,706

  20. United States: 99.46%
    External debt (as % of GDP): 99.46%
    Gross external debt: $14.959 trillion
    2011 GDP (est.): $15.040 trillion
    External debt per capita: $47,664

http://www.cnbc.com/id/30308959/The_World_s_Biggest_Debtor_Nations

 

While Gillard’s Regime are converting Australia to Left Wing principles our economy and the economy of our future is not looking great, soon the External debt is going to come back and bite us on the backside, and to resolve this will mean our children and Grand children really will be paying for the sins of the Worst Australian Government in history.