Debt Crisis: America and Europe on the Brink

dollars and euros
SAUL LOEB/AFP/Getty Images
President Barack Obama and German Chancellor Angela Merkel
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“The United States and the European Union are currently engaged in competitive decadence,” writes historian Timothy Garton Ash at the Guardian. Among other deep similarities, both seem incapable of resolving their debt and deficit problems; and both are teetering on the edge of a full-blown debt crisis. To be sure, there are differences. Americans are divided by ideology, Europe by nationality; the E.U., a brittle collective of 27 sovereign states, might not survive the crisis intact, while America obviously will; the United States got here by enacting massive tax cuts, undertaking unaffordable wars, and spending its way out of a near-Depression; Europe, by way of a borrowing-and-spending binge.

But the E.U. and the U.S. share “profound similarities.” Both lived beyond their means, racking up dangerous debt levels; both egged on a financial system that “privatized profit and socialized risk”; both have encouraged “relentless” debt-fueled consumerism; both have had to contend with the baby-boomer expectations of “ever more healthcare, welfare, social security and pensions,” to be paid for by – whom? And both, says Garton Ash, suffer from a “perversion of democracy” that “consists in giving vocal sections of the people what they want in the short term rather than proposing to most of the people what they need in the longer term – and taking the risk of short-term unpopularity along the way, as all good leaders have done.” And that’s how we got where we are today, on the verge of financial collapse.

'Debt crisis: In our competitive decadence, we face eurogeddon and dollargeddon' [Timothy Garton Ash, Guardian]