Markets hate panic. And there are a lot of panicky people around right now saying panicky things. It’s kind of amazing that with all the wild talk the market hasn’t really nose-dived.

Commodities investor Jim Rogers, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s, has looked at a small percentage of mortgage defaults and sees a real estate disaster right around the corner: “Real estate prices will go down 40-50 percent in bubble areas,” he warned on Friday. “There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history.”

Another doomsayer is U.S. Comptroller General David Walker, who’s slightly hysterical about another kind of debt—the debt of the U.S. government. He was on “60 Minutes” last week warning that the nation is about to go broke and is—in that tired, old phrase we last heard from Ross Perot—“mortgaging the future of our grandchildren.”

Specifically, Mr. Walker told a worried reporter: “If nothing changes, the federal government’s not going to be able to do much more than pay the interest on the mounting debt and some entitlement benefits. It won’t have money left for anything else: national defense, homeland security, education, you name it.”

Now before ripping into these two gentlemen, let’s get a few things clear. Defaults on loans are never good. And politicians have been spending too much of our money on wasteful government boondoggles for too long.

Having acknowledged the obvious, here are a few facts to consider.

Subprime loans—the kind the market’s now fretting about—amount to about 20 percent of all mortgages. Of those, about 12 percent are now or are about to be in default. In other words, about 2.6 percent of all loans are crashing.

That’s not a lot.

In fact, a real estate friend of ours in the mortgage business said that the mortgage market could easily withstand a default rate of from 4 to 5 percent without a major contraction. So to expect a 40 percent to 50 percent contraction of the real estate market based on the current number of defaults seems just a bit hysterical.

Now, as for Mr. Walker, he’s singing a blast from the past that’s reprieved about every decade or so. The important thing to keep in mind when thinking about the national debt is its size in relation to out entire economy. There have been times when our nation has borrowed much more than we are borrowing now.

For example, during World War II, our national debt totaled more than 100 percent of our annual economy (known as Gross Domestic Product, or GDP). Towards the end of the Cold War, our debt averaged about 50 percent of GDP. As the Wall Street Journal pointed out in a 1994 editorial about the debt, “We would certainly argue that winning the World War was worth borrowing 100 percent of GDP, and winning the Cold War was worth borrowing 50 percent of GDP.” (WSJ, November 18, 1994)

Once the Cold War was officially ended with the 1989 downing of the Berlin Wall and the subsequent demise of the Soviet Union, our federal deficit and national debt began to decline. The “peace dividend” also coincided with a (temporarily) more responsible government, divided between Republicans in Congress and a pragmatic Democrat in the White House. The welfare reform bill, regulatory and trade liberalization (like NAFTA) and other stimulants of economic growth generated more private-sector income, while limiting the role of the government in the economy. This helped reduce the deficit and led to a budget surplus, until we were hit with the double whammy of the dotcom bubble burst and 9/11.

Nowadays, we’re in the midst of a new war. I speak not of the battle in Iraq, but of the larger World War against radical Islam. This is a war that’s worth winning before terrorists create the kind of damage that would cost many times the amount of money we’re now paying to service the debt. But still it will cost a lot more money. Freedom is not free, and the debt will be necessary to help us defend our freedoms.

Having said that, since the tax rate cuts of 2003 kicked in, we’ve seen a steady decline in the rise of our budget deficit. This is due to the most fundamental law of economics: Incentives matter.

As taxpayers are allowed to keep more of their earnings and investments, they become more productive. They work harder and take money out of tax dodges and put them back in the taxable economy. So you have the seemingly contradictory effect of government tax receipts growing as tax rates decrease.

It worked now; it worked in the ‘80s with Reagan tax cuts, in the ‘60s with JFK tax cuts, and in the ‘20s with the (Treasury Secretary) Mellon tax cuts. Had we merely focused our intentions on balancing the books to lower deficits, the country would not have grown and our deficits would likely have increased as a percentage of GDP.

Do I like budget deficits? Of course not. But the problem with the folks that shout loudest about deficits is that they are usually willing to sacrifice private-sector growth (in the form of tax increases) for the sake of lowering the deficit. In other words, they assume that a lower debt is better than anything, even if it takes more cash out of the taxpayer’s pocket.

This is nonsense. There’s nothing wrong with cutting spending (i.e., the size of our monster government) to lower the deficit. But there’s plenty wrong with trying to lower the deficit (or the overall debt) by squeezing an overtaxed population even more than they already are. Besides, as it’s been proved again and again: if you raise tax rates, you very often end up with less revenue and higher deficits.

Oh, did I mention that the market has gone up as all these doomsayers have been predicting the worst for years and years? Will it continue to? Not always, and not as quickly as it did in 2006.

But while doomsayers may be right occasionally (like the broken clock), they shouldn’t be allowed to panic the markets with their dire predictions. Look at the facts, don’t listen to hysterics.

E-mail your comments to observer@foxnews.com

David Asman is the host of "Forbes on FOX" which airs on the FOX News Channel, Saturdays at 11 a.m. ET.

David Asman joined FOX News Channel (FNC) in 1997 and currently serves as host of "Forbes on FOX," a weekend half-hour program that offers an informative look at the business week (Saturday from 11:00-11:30 AM/ET). Asman is also an anchor on FOX Business Network, where he co-hosts "After the Bell" (4-5 PM/ET) with anchor Liz Claman. Click here for more information on David Asman