Europe needs to increase its defence spending

Discussion in 'Warfare / Military' started by mepal1, Jul 15, 2011.

  1. Mushroom

    Mushroom Well-Known Member

    Joined:
    Jul 13, 2009
    Messages:
    12,497
    Likes Received:
    2,421
    Trophy Points:
    113
    Gender:
    Male
    This is true in many cases. And some countries that do not look like they are in trouble now will be in very short order.

    The US National Debt is roughly equal to it's GDP. In both Italy and Greece, the debt is 130% their GDP. Spain is actually one of the better off nations, with a debt that measures only 74% of their GDP.

    However, what worries me is Japan. Their national debt is currently 204% of their GDP. That is a recipie for economic implosion in the near future.
     
  2. unrealist42

    unrealist42 New Member

    Joined:
    Mar 3, 2011
    Messages:
    3,000
    Likes Received:
    36
    Trophy Points:
    0
    The US GDP is about equal to that of the central EU. US government debt at all levels is much higher than that of the EU but the picture is somewhat obscured because EU taxes and spending are more centralized than in the US where state and local governments spend a lot and have racked up a lot of debt.

    I am sort of baffled by the attacks on Spain, whose debt is comparatively low and the government is running a budget surplus. Italy and Japan are much alike in that most of their debt is held locally instead of offshore so there is not really a lot of leverage the debt arbitragers can bring down on them.
     
  3. IgnoranceisBliss

    IgnoranceisBliss Well-Known Member

    Joined:
    Oct 9, 2009
    Messages:
    5,201
    Likes Received:
    41
    Trophy Points:
    48
    The majority of U.S. debt is also held locally.
     
  4. Mushroom

    Mushroom Well-Known Member

    Joined:
    Jul 13, 2009
    Messages:
    12,497
    Likes Received:
    2,421
    Trophy Points:
    113
    Gender:
    Male
    This is something most people do not understand.

    To explain it easily to most people, roughly 90% of US Debt is in the form of U.S. Treasure Securities. These are T-notes, Bonds, Savings Bonds, and the like. And of all Treasury Securities out, over 2/3 are held in the US. Either by US corporations, or individuals.

    Of the debt held overseas, only 1/4 is held by China. So for those that like math, China does not hold most of the US debt. It holds one quarter of one third of the US debt.

    http://en.wikipedia.org/wiki/United_States_public_debt
     
  5. unrealist42

    unrealist42 New Member

    Joined:
    Mar 3, 2011
    Messages:
    3,000
    Likes Received:
    36
    Trophy Points:
    0
    To be more clear, China holds about $1Trillion of the US $14Trillion debt.
     
  6. Mushroom

    Mushroom Well-Known Member

    Joined:
    Jul 13, 2009
    Messages:
    12,497
    Likes Received:
    2,421
    Trophy Points:
    113
    Gender:
    Male
    But Japan and the UK hold an equal amount between themselves. And throw in the debt held by Taiwan, and China falls back. China holds T-bills, so there is not much they can do other then hold them until maturity and turn them in.

    For most of us that own cars and homes, the bank holds the majority of our debt. But I can't see a bank telling somebody he has to change his job because they do not like it.
     
  7. unrealist42

    unrealist42 New Member

    Joined:
    Mar 3, 2011
    Messages:
    3,000
    Likes Received:
    36
    Trophy Points:
    0
    I think you need to understand the international trade regime in China. China requires all international currency to be deposited in the bank and converted to Yuan. If there is a requirement for a foreign currency one is required to purchase it through the government controlled currency exchange. Due to the huge imbalance in trade with the US China is awash in $US, far more than needed for foreign transactions. In order to address this imbalance and uphold the value of the Yaun the government removes $US from the exchange by buying Treasury bills, which are the most secure and liquid thing you can do with that many $US.

    This is vastly different from the EU or US where the government is not so directly able to interfere with currency exchange and the reason why China's currency is not considered to be convertible.

    Most other international holders of US debt are not governments but private banks and individual investors. There are some nations that hold US Treasuries in leiu of $US as currency reserves, which would pay them no interest otherwise but none that hold US treasuries for the same purpose as China.

    If the EU had Eurobonds China's complaints would be much the same against the EU since it would rapidly become a major holder.

    But it is all hollow rhetoric. China cannot divest itself without a rise in its own currency, something that it is loath to let out of its control much as it wishes to make the Yuan convertible.
     
  8. DutchClogCyborg

    DutchClogCyborg New Member

    Joined:
    Aug 20, 2009
    Messages:
    12,572
    Likes Received:
    95
    Trophy Points:
    0
    Europe needs to integrate its forces in one unit, get the same equipment etc.

    We cant spend more but can spend more efficient,
     
  9. Nissi

    Nissi New Member

    Joined:
    Jul 30, 2011
    Messages:
    89
    Likes Received:
    2
    Trophy Points:
    0
    No !

    But we can do something.

    Netherland, Österreich, Schweiz and Belgien can join Germany :)
     
  10. Mushroom

    Mushroom Well-Known Member

    Joined:
    Jul 13, 2009
    Messages:
    12,497
    Likes Received:
    2,421
    Trophy Points:
    113
    Gender:
    Male
    That will never happen.

    And while they do not use the same equipment, most of it is already standardized thanks to NATO.
     

Share This Page