As the global financial crisis has worsened, Europeans could only look on with envy as the United States continued to issue debt and successfully sell it – and at amazingly low interest rates. That’s because America has a central bank empowered to be the ‘lender of last resort,’ which means that if private investors don’t buy U.S. Treasury Bonds, the FED will. According to Ulrike Herrmann of Germany’s Die Tageszeitung, it is time the E.U. empowers the European Central Bank to do the same.

For the Die Tageszeitung, Ulrike Herrmann starts out this way:

The sum is enormous: America’s debt has reached $15 trillion. Yet that doesn’t seem to bother anyone. Undeterred, investors shovel their money into the United States. For a ten-year government bond, the U.S. must pay only 1.9 percent interest. That’s not just next to nothing, it is less than nothing. After all, inflation is at 3.53 percent. So investors are actually losing money when investing in the U.S.

More amazing still: Even the turbulence of U.S. politics doesn’t seem to shake investors. Calmly on Monday, they witnessed the U.S. Congress unable to even agree on an austerity program. As if nothing had happened, the returns for U.S. government bonds remained sensationally low.

Europeans can only be envious. Most euro-countries have far less debt than the U.S. – and still E.U. monetary union is headed toward bankruptcy. The Spaniards must now pay about 7 percent interest, something no country can sustain in the long run – and despite a Spanish public debt-to-GDP ratio of only about 70 percent. In the U.S., it is nearly 100 percent. Yet Washington easily borrows trillions – while investors immediately panic just thinking about Spain; or Belgium, Italy, and most recently, France.

READ ON IN ENGLISH AND GERMAN AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.

WILLIAM KERN (Worldmeets.US)
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Copyright 2011 The Moderate Voice
  • I find this hilarious. Yes, Europe is having to deal with a major crisis while the US is avoiding it. But that’s only because we’re building it up into an even bigger crisis further on down the road. That ability to keep rates low while investments were going bad is what made our the fall of 2008 so big.

    If I was going to be shot into the air, I’d want the cannon to be weak.

  • ShannonLeee

    Investors care about one thing, their delusion of stability and security. The US can fix its problems. The EU, in its current form, cannot…and seriously, until the EU becomes virtually one country, these problems will never be fixed.

    I have to wonder if Greece, Italy, Spain, France, and Portugal want to be led by a woman….or at least whoever replaces Merkel in the next election.

  • Jim Satterfield

    I have to agree with Shannon. In spite of our problems with Congress, we at least have the structure in place to be capable of fixing our problems. But the EU just can’t with its current structure or anything resembling it.

  • So our problems here have been fixed? News to me.

  • I’m with Prof. Looking towards us for financial wisdom would be like taking dancing lessons from a leper.

    The EU does have it harder, but still, we’re clearly irresponsible on this side of the pond.

  • ShannonLeee

    “The US CAN fix its problems”

    didn’t say they were, but we have the ability to do so.

    The EU cannot in its current form and the changes required to fix their crisis also requires changes to the EU and other national constitutions. I believe Germany being one…and that ain’t happening.

    So investors of course run to the dollar.