albertiyang
albertiyang
- Feb 1, 2012
- 1
- 0
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Hey everyone, this is my first post, so please forgive me if I cross any taboos or please let me know (I did read the guidelines). Anyways...
I understand that the European economy is not doing very well right now and it's because of mounting debt problems. I believe this is because the debt to deficit and debt to GDP ratios for some European countries (specifically the PIIGS) are close or past 1, meaning they owe more money than they make.
Also the problem with the European economy is that they all share one currency, "the euro" and also are heavily invested in each other. If one government were to default, then this would cause some sort of chain reaction and cause other European countries' economies to collapse.
To my knowledge the US debt is close if not more than the US GDP (15-16 trillion debt vs. 15 trillion GDP) and also China is heavily invested in our debt (i think...).
Why is there no panic around the US defaulting or what makes the US so special vs. European countries when we have about the same debt to GDP ratios??
Some Hypothesis I had:
-US tax rates are not as high as European tax rates, and so a last ditch effort to save our economy would be to raise taxes?
-Most of our debt is owned internally and thus not as big of a problem? (I believe China is the only major investor in our debt)
-On a side note does anyone know the credit rating for other big countries? like Russia, China and the European countries? I know that ours was recently demoted from AAA+ to AAA I think.
Thanks! Looking forward to friendly discussion and would love to see sources (if you're allowed to post links)
I understand that the European economy is not doing very well right now and it's because of mounting debt problems. I believe this is because the debt to deficit and debt to GDP ratios for some European countries (specifically the PIIGS) are close or past 1, meaning they owe more money than they make.
Also the problem with the European economy is that they all share one currency, "the euro" and also are heavily invested in each other. If one government were to default, then this would cause some sort of chain reaction and cause other European countries' economies to collapse.
To my knowledge the US debt is close if not more than the US GDP (15-16 trillion debt vs. 15 trillion GDP) and also China is heavily invested in our debt (i think...).
Why is there no panic around the US defaulting or what makes the US so special vs. European countries when we have about the same debt to GDP ratios??
Some Hypothesis I had:
-US tax rates are not as high as European tax rates, and so a last ditch effort to save our economy would be to raise taxes?
-Most of our debt is owned internally and thus not as big of a problem? (I believe China is the only major investor in our debt)
-On a side note does anyone know the credit rating for other big countries? like Russia, China and the European countries? I know that ours was recently demoted from AAA+ to AAA I think.
Thanks! Looking forward to friendly discussion and would love to see sources (if you're allowed to post links)