In all of the kerfuffle over sovereign debt issues in Europe, it has been largely overlooked that the level of net government debt is higher in the US than in the Eurozone as a whole and it is forecast to increase sharply over the next 5 years, unlike in the Eurozone where is it forecast to stabilize.
According to recent IMF data, net government debt in 2010 in the US was 64.8% of GDP which compares with 64.4% in the Eurozone as a whole.
The IMF forecasts that by 2015, US government debt will balloon to 83.4% of GDP compared with a projected level for the Eurozone of 68.4%.
In 2015, the level of government debt in the US will be higher than in France (78.8% of GDP), the UK (76.5%), Spain (62.7%), Germany (52.6%) and Canada (34.4%), among many others.
The problems in the US also seem to be move extreme than in the Eurozone. The political impasse in the US make any solution almost impossible to see and with zombie banks unable or unwilling to lend and consumers suffering under the weight of a decade of wealth destruction, it is difficult to see why the US dollar is still strong, its stocks are so resilient and risk assessment in US government bond yields are so low.
While the Eurozone is riddled with its own very deep and chronic problems on sovereign debt, the US appears to have more headwinds to confront.
And by the way – Australia’s government net debt according to the IMF will be 6.4% of GDP in 2015.