Sovereign Debt Problems – United States or Europe, Who Is Worse Off?

Posted: Jan 20, 2012 |Comments: 0 |

Recently Standard and Poor's downgraded 9 European Countries including the number two EU member France. For now, it seems the number one EU economy Germany is off the hook. There are six Euro-zone Countries that currently have equal or greater debt to GDP ratios than the United States. Greece and Italy currently have higher GDP ratios while Ireland and Portugal are just about the same as the US. Currently the United States is at 100% Debt to GDP. 

A big problem for America is that the financial analysts who do all the reporting on the United States debt and calculate all the financial data, only look at parts of the fiscal equation to render their reports. They mostly only factor in debt where the US borrowed money, where the Federal Government has sold Treasury Bonds. Financial analysts don't factor in other important government debts or obligations. Such as $6 trillion in loan obligations from Fanny Mae and Freddie Mac, which are guaranteed by the Government. Or over $1 trillion in student loans again guaranteed by the Federal Government. The US is required to pay on these loans in the case of default.

The reality right now is that more and more student loans and home mortgages are being defaulted on every day. But none of this debt is included in the National Debt or GDP numbers. Then there is Social Security & Medicare obligations which again are not factored in. This is real debt that amounts to an additional $3 trillion plus dollars. Then as a Nation no one factors in the debt created from individual states that the Government is obligated to pay for. If all these factors were included in the real numbers used to arrive at the US Debt & GDP, the United States would actually be worse off financially with a higher debt to GDP ratio than Greece, which is the Euro-zone's highest indebted country.

What is currently happening today due to the weakness in the euro, is giving strength to the dollar (under the wrong conditions). People in masses are dumping the euro and buying dollars as a safe haven asset. This allows the interest rates to be very low for the US Government to borrow more money. This creates an illusion that the US economy is in better fiscal condition than the economies of Europe. The massive problems in Europe are currently mainstream; this is what everyone is looking at and paying more attention too.

This diverts attention from the US making it appear America is in a much better financial situation. It is only a matter of time before the real truth is apparent. The US dollar is still the world's reserve currency, being used and traded daily in many countries. Once the house of cards America is currently building itself upon comes crashing down, it will destroy the dollar and not only take out the United States but many other economies with it.

Gold and silver are currently still trading at enormous discounts. It's an exceptional time and opportunity currently to invest in the best forms of safe haven assets being gold and silver. Once the European and American economies collapse there truly will be very little left that will hold its true value. Investing in these precious metals today will insure your financial future tomorrow and beyond.

Tom Genot -

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For information, news, articles and videos to invest in gold and silver and where the best places are to buy it. You will also find information for preparing and protecting you, your family and your assets from the pending economic crises and destruction of the US Dollar. Author Tom Genot provides information and resources helpful to everyone. Insure your prepared beforehand, check us out at www.coinbullion.net.

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