What is Wrong with the Obsession with Public Debt?

In Australia they have the same political rhetoric about public debt being the big problem that we should all be worried about. But they have a TV show with some smart young presenters, who collar Tony Abbott, Leader of the Opposition Liberal Party (a centre right party). In this clip they confront the Honourable Mr Abbot with some hard truths about his own debt levels. 90 seconds of quality economic commentary!

So what about in the UK? Governments revenue is about £1.5 trillion per annum, and their debt is about £1.1 trillion. Australia has vast mineral reserves and has not had a recession, whereas the UK has been in depression since 2008.

According to the Guardian, Osborne, earns £134,565 a year and owns at least one house,  but he has a £4million trust fund. He also has a 15% stake in the family business. Reports on his wealth vary by quite a bit so it's hard to pin down exactly. He may also "receive a six figure" in rental on a Notting Hill Property. Ironically Osborne manages to not be in the top tax bracket despite being a millionaire.

David Cameron's salary is £190,000 but his personal wealth has been estimated at £30million. The PM denies this, but his family accumulated an enormous fortune and he has followed in their footsteps. No doubt most of his fortune is hidden from view. Mr Cameron’s house in North Kensington is valued at £2.7million, and his Oxfordshire home at £960,000 (we're not sure what his mortgages are on these if indeed he as one). (Telegraph)

So neither Cameron or Osborne are likely to be in debt in the same way poor Mr Abbott and, sadly, we couldn't repeat the joke here unless Osborne or Cameron was seen to buy an expensive new house. Indeed you could say the joke is on us.

Also household debt here is not 6 times government debt. Household debt (including mortgages) is about £1,456 trillion (Debt Simple Dec 2012). This is about equal to Gross Domestic Product. However the Office of Budget Responsibility is forecasting this is rise! So the UK public is more indebted than the government is. Gross Disposable Household Income figures lag behind GDP but in 2010 were £15,709 per head so about £900billion or £0.9trillion. Which is substantially less that the amount of debt.

The government is actually in a much better position than the average household who's debts exceed their income by a substantial amount.