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Euro Debt

Printed From: WorldHistoria Forum
Forum Name: Economic History
Forum Description: The development of past economic trends, structures and institutions
Printed Date: 14 Jul 2020 at 17:52
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Topic: Euro Debt
Posted By: Captain Vancouver
Subject: Euro Debt
Date Posted: 10 Jun 2013 at 11:47
Interesting story here that relates that European debt, as a ratio of debt to government revenue, is actually much higher in the US than in Europe, even the most troubled countries, such as Greece and Ireland. Less ability to collect taxes would seem to place them in a more vulnerable position." rel="nofollow -

Posted By: Al Jassas
Date Posted: 11 Jun 2013 at 04:59
Not necessarily.

Europe has tapped out when it comes to taxation, they can't tax anymore.

In the US, the taxes collected are still at a historical low. If the US collected 46% of the entire GDP as taxes, which is the case in France, this means a GDP/Revenue equalling about 230%. The fact is the US government only collects 18% of GDP as taxes which is not only low but actually quite amazing given the size of the US economy and how dependent private companies on goodies from ma government.

Anyway, this way to measure debt is wrong. It confuses public debt, debt held by private individuals which in the US still about 70% of GDP, with total government debt which includes intergovernmental debt, roughly 35% of GDP and part of medicare/social security/Federal financing bank holdings.

The latter debt is basically issued by the government for the government and the government can easily write it off which is the reason why the right in the US wants to "reform" social security and medicare. It is basic theft.


Posted By: Captain Vancouver
Date Posted: 11 Jun 2013 at 11:02
I was thinking of vulnerable in terms of political sentiment preventing adequate funds to support civil society, and the consequences that might flow from this. I agree with you that the US has considerable options available to them to fund programs such as medicare, and others. I seems to me though that lobbying and right wing influence has produced a situation where this has become a near impossiblity, so much so that borrowing from China seems a safer alternative.
The resources of the US have gone rather lopsidedly into military power, and also the assurance of corporate security. Polarization of wealth means that many in the middle class suffer, despite increases in GDP. These two priorities are of benefit to a group we can rather easily identify, but not so much to the average American worker, or middle class tax paying citizen. So if such huge amounts of resources can be so shifted, what is the outlook?
Europe may be in trouble, but if the full resources of society can be brought to bear, it seems less likely these problems will become a crisis, certainly with well established economies. Not so sure about the US.

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