European debt issues are dominating the headlines, and those problems are serious, but the Europeans are not the only ones swimming in the debt pool. Excessive debt is a global reality and most of the developed nations are playing the game hard. Really very few nations operate in the black, mostly oil producers. Many emerging economies have kept control of the debt load. It isn’t that it can’t be done by developed nations; Norway operates in the black, and Canada and Australia carry very reasonable debt loads. China carries little debt, and has huge reserves (however, they have significant infrastructure issues that will need to be addressed in the next decade).

So who’s overspending? Greece, obviously, and all the bailouts are likely to accomplish is to ease the sting of an eventual default. Spain, Portugal, Ireland, and Italy are in some trouble, and Germany, France, the UK, and Japan are spending way too much. Japan and the UK control their own currency so expect efforts to devalue. The Euro is already at a four year low and likely to continue to drop versus the dollar.

What about the US? We are in slightly better shape than our G7 partners (or is it G8 now?). Our debt load is somewhat lower than others (as a percent of GDP), but out deficit spending (as a percent of GDP) is near the top and presents a real danger.

Over the long run the problem must be resolved with a mix of higher taxes and less government spending. That will have a depressive effect on the economy. If the same effect happens to many economies world wide then you can expect slow going for the world economy. That means slower job growth and smaller fixed returns on investments. The sad truth about debt is that somebody always pays. When the debt is your country’s then that somebody is probably you.

One of the sad things here is that a politician who says that we have to radically reduce spending to pay off the debt is probably not getting elected. Nobody likes the sad-sack downer guy, even when he is right.

Jim Heitman, CPF Jim Heitman, CFP®, is a writer, speaker, and Certified Financial Planning practitioner in Southern California.