Proton Soup said:
this is the part no one seems to get.
and this euro stuff just pisses me off. we end up having to support libya's war because europe has divested itself of military spending. they save huge amounts on their military budgets so that they can invest in social programs and lure our businesses there with lowered tax rates. our dollar is suffering because we are europe's military.
i'm at the point now where i think "defaulting" is the best thing that could happen to this country. we are complete idiots.
The EU has the same problems as the US when it comes to industry. Basically, banks/investors cash in on industry which has become uncompetitive, and build factories elsewhere, where China is -at the moment- the most striking example. If anything, blame banks, investors, open markets or even capitalism for that.
Note also that there is virtually no money coming into the EU. On the contrary, money goes into the US because of the deficits.
With an extreme trade deficit and an extreme government budget deficit, you cannot even state that that hurt the US in the last decennia. As it stands at the moment, China -for example- is giving goods away, essentially for free. They just hope that at some point the US will make good on its future promise to pay off their debt (which in the end must mean that goods are shipped back from the US).
Defaulting in some sense isn't a bad option because all the money which was borrowed or poured back into the US will evaporate. Which, again, means that banks would just have given away their money to the government, also that other countries would have given goods (oil/iPhones) for free to the US over the last decades.
But defaulting also implies that you blow up the US economy. And it stands to be seen how long it will take for the US economy to recover from that. It would be unclear for everyone if banks or the rest of the world would be inclined to invest in the US that fast, go for the same scheme, factories are not build easily, and this is not the fifties where the US was in some sense one of the very few producers of (high-end) goods in the world.
But, as it stands at the moment, there really is nobody else to blame except for your government. It is the same as a family which borrowed too much at the bank, and tries to borrow itself out of the position it put itself into. You can't blame a bank for providing cheap credit, which -rather silly- the majority of the Greeks now seem to do.
As far as I can see the US went to an unsustainable mode of borrowing decades ago. I am amazed that the US has a triple A rating, whereas Greece has not, but the debt per capita or as percentage of GDP is much larger (though I see different numbers on that). But a lot of people in the EU have been wondering about that for years.
Please note that I write all this with a tongue-in-cheek. I really believe it will work out one way or another since it a solution
must be found. The US can borrow more, inflate, implement austerity measures, redeem only a part, or eventually work itself out of the debt position it put itself into; heck, they can also just nationalize all banks and close the borders. It will work out one way or another, but, sorry to say, my best guess is that the coming years will be those of recession, unemployment, and less consumption than before - an adjustment for a decade, or so.
But people have been saying that for years and it never happened, I am not an economist, so what do I know?
(Given all of the above, the most likely scenario still is that the US government will come to some agreement now, in the future fix the biggest parts of the deficits, or maybe even banks will start to help out the government, and stuff will just continue as normal.)
(And regarding the military issues. I agree somewhat, the EU needs a coherent army. Note that the EUs army is bigger than that of the US, but just not mobile because of the interests of all the different states. But also, people in the EU go into welfare when unemployment is high, in the US people just go into the military, and that is subsequently used. From an economic perspective, it is just a manner of hiding unemployment and stimulating the economy.)
Of course it is: