Maher, I won't try to change your opinion, it seems very informed, but I'll at least give you a different perspective on the numbers.
You are correct in the sense that if you break it down, foreign investment is the largest categorical debt holder. But when you combine the other categories which are essentially all held here in the US... fed's holdings, private pensions, banks, insurance companies, state and local governments (including their pensions) it's more. My exaggeration was just to make the point that a lot of the debt is held by institutions regular Americans get a return from.
And to your larger point - the debt is a concern, but it shouldn't top your list. 8 percent unemployment is a larger concern.
The rise in the deficit is almost entirely the result of the financial crisis. Automatic payments like unemployment, food-stamps, temporary tax cuts etc caused a temporary spike in the deficit. The path we were on in 2006, if it had not been interrupted, would have led to a surplus right now.
(Ignore the commentary, but these charts show you all you need to know about the deficit - there wouldn't be one right now were it not for the financial sector collapse in '07, and it's on the decline again
http://bit.ly/SdryN8 )
And the debt, for one thing, is vastly misunderstood. The total debt is an essentially meaningless number. What should be considered is our annual interest payments on the debt, which are comparatively very low. I know you're a street guy, just look at the borrowing rates in recent years as our deficit has blossomed - near record low interest rates. The US is borrowing at less than the rate of inflation. We're borrowing $1 and on a 20 year note we're paying back 90 cents.
Following WWII the US never paid back it's debt, it became insignificant - because the size of our economy grew over the next half century. There are 30million more Americans today than there were in 1990. $50k in debt is a lot if you make $50k a year; it's chump change when you make $1 million annually. That's what happened to the US economy, and continues to happen. Unlike Europe which has relatively stagnant populations, our country continues to grow exponentially. Meaning our borrowing power will only continue to grow.
http://en.wikipedia.org/wiki/File:US_GDP_per_capita.PNG
Further, the scary debt in the future that analysts talk about is entirely a result of rising healthcare costs. That's it. And we already spend far more than comparable countries, our spending on HC simply can't continue to rise at the rate it has; there's going to be a plateau. Health care costs in the US have risen 700% percent in the last 30 years - that's incredible growth, but it can't continue. There will be a market reaction. No one thinks when I'm 60 I'll be paying $3,500 for what is a $500 Dr visit now.
And along similar lines, it's entirely possible health care costs start to decline as a % of gdp. Like I said we spend twice what other advanced countries spend on health care, and with no tangible difference in quality. I'm not talking Canada... take Germany, in every measurable way there health care is equivalent or better than ours... but they pay half as much for it. If we were to start to reform the health care system (even more so than the ACA) the debt would plummet. Our debt is because of ridiculous health care costs; that's it.
http://bit.ly/TZQg2E
In summary, the deficit and debt aren't a catastrophic threat. There would be no deficit were it not for the recession, and in a few years we'll return to that trend and it'll be gone. Temporary spike.
And the future debt is simply an issue of health care costs, which will partly fix itself through market forces (consumers refusing to pay higher costs), and the remainder of which can be corrected with reasonable political reforms.
Anyway, that's my case for easing your fears B-)
And for what it's worth these aren't optimistic ideas I pulled from my ass - Goldman's chief economist Hatzius said as much in a series of interviews after the new year, and the editors at the financial times said the same thing last week.