Re: It's Your Choice, Europe: Rebel Against the Banks or A...
by InclinedPlane on Tuesday December 06, 2011 @06:22AM
(#3318870)
Even the EU could print more money if it really, really wanted to.
The reason is that the debt loads are different. For the US it's actually NOT unmanageable. It's a lot, but it's fully manageable if people and the government take the right steps to keep it in check.
Europe has much higher bank debt, overall higher government spending to GDP ratios (keep in mind in many cases this is with a lower overall GDP as well), and in a few cases higher debt to GDP levels. Europe has a handful of critical financial problems: shaky, heavily indebted banks; a massive debt burden; very little room to increase government spending; and an inability to actually regulate key aspects of the Eurozone economy (due to flaws in the nature of the laws backing the Euro). The EU in general is incapable of pulling even a hail mary bank bailout to stall for time. Add on top of this an even larger burden of state services (socialized medicine, pensions & retirement, welfare, etc.) that European politicians will have trouble downsizing to try to pay off the debt.
The US has a massive defense budget it could, in theory, trim substantially to bring the deficit under control, especially in concert with slightly reduced spending across the board and slightly increased taxes. The EU doesn't even have that option though, it's coming down to the wire and very little short of a miracle can save them.
Edit: note that the issue isn't paying down debt in the next few years, that's a fantasy for most of the world. The issue is keeping things together for the next few years to allow for long term effects like economic growth and inflation to really take care of the problem. For some parts of the EU there doesn't seem to be a way to make that happen. It won't be the worst thing in the world if some countries default on their debts (it'll probably be a footnote compared to other events of the last 3 decades), but it won't be a picnic either.
The reason is that the debt loads are different. For the US it's actually NOT unmanageable. It's a lot, but it's fully manageable if people and the government take the right steps to keep it in check.
Take a look at the graphs here: http://www.theatlantic.com/business/archive/2011/11/reasons-...
Europe has much higher bank debt, overall higher government spending to GDP ratios (keep in mind in many cases this is with a lower overall GDP as well), and in a few cases higher debt to GDP levels. Europe has a handful of critical financial problems: shaky, heavily indebted banks; a massive debt burden; very little room to increase government spending; and an inability to actually regulate key aspects of the Eurozone economy (due to flaws in the nature of the laws backing the Euro). The EU in general is incapable of pulling even a hail mary bank bailout to stall for time. Add on top of this an even larger burden of state services (socialized medicine, pensions & retirement, welfare, etc.) that European politicians will have trouble downsizing to try to pay off the debt.
The US has a massive defense budget it could, in theory, trim substantially to bring the deficit under control, especially in concert with slightly reduced spending across the board and slightly increased taxes. The EU doesn't even have that option though, it's coming down to the wire and very little short of a miracle can save them.
Edit: note that the issue isn't paying down debt in the next few years, that's a fantasy for most of the world. The issue is keeping things together for the next few years to allow for long term effects like economic growth and inflation to really take care of the problem. For some parts of the EU there doesn't seem to be a way to make that happen. It won't be the worst thing in the world if some countries default on their debts (it'll probably be a footnote compared to other events of the last 3 decades), but it won't be a picnic either.