I'm not an economist, but the Northern Rock backing by the UK government really offended many Europeans, so I guess there is a point.
However, one thing that was learned in Europe, is that you cannot have an economic union without synchronizing politics. A deficit in one country that could compare to the one in USA is unrealistic. And what destabilizes a currency most - USA's trade deficit, or Europe's lack of government backing of banks? If there is a huge problem threatening society, governments will intervene anyway.
As teenager, I moved to a country that had a huge trade deficit, almost as big as USA's (in relation to BNP), and I didn't expect the country to be debt-free in my life-time. This was depressing - all other countries were growing and having fun while we were producing stuff for them, and trying to avoid consuming ourselves. First we sent a part of our home owners into bankruptcy and increased taxes in order to reduce consumption. Then we created a very stable economic policy which increased trust in our governments and lowered our rates, and then we found oil. This way, it only took 30 years to get rid of the debt, which is impressive. I'm not sure that USA can solve its problem in 30 years. |
