By Les Dunaway

We’ve heard lots about America’s debt in the past weeks – unless you watch the 6 o’clock news, then all you’ve heard about is shootings and wrecks. Some commentators would have you believe that debt is bad. No, debt is not bad. Debt is a business tool. Arguably, the most important business tool. Look around, every thing you see – buildings, roads, hospitals, …. were built with debt.

So what’s all the hoo-haa about? Well debt is like many drugs – the right amount can save your life, but too much WILL kill you!And, like drugs, the good amount vs the bad amount varies with body weight – in the case of a nation, the GDP. For more on this look at “Just The Numbers, Mam”

America’s true debt, not the $14T myth you hear on TV, is around $75T – or   500 times GDP! If a family, making $50,000 / yr owed $25,000,000 would that be a problem?

For a good look at this issue take a look at John Ransom’s “The Mother of All Bankruptcies”. Look especially at his discussion of accounting rules – Generally Accepted Accounting Principles (GAAP). Remember Enron? Well, your government is engaging in accounting slight-of-hand that makes Enron look like choir-boys.

Bill Bonner, in”Springtime For Bailouts But Economic Zombies Still Roam“, Forbes Apr 5, 2011, cites the examples ongoing in Europe of where this leads. Since his article, Portugal has, essentially, filed bankruptcy. I urge you to read this article, from the Irish Times, for a close up look from the perspective of a country that’s just gone through the bailout process. On the same page the preceding link takes you to you’ll find “Mortgage holders take hit as ECB increases interest rates” which will give you a preview of our near future- “Fed’s Lacker: may need to raise rates this year”

All this reinforces the Stanford report I reported in last week’s column – sovereign debt is a problem, but it is perhaps less a problem than sovereign malfeasance.