Simplistic view. Its a global economy and the system is heavily interlaced.
Correct, even though US does not export a lot to Europe, other countries in that list do, and they are already feeling the pinch of European contraction going on as we speak. The world economy is indeed intertwined, no way getting away from that.
Every previous worldwide economic slowdown began with sudden problems erupting in a single country or area.
4 nations in that list that are in Europe.
They total about 10% of our exports.
If all four of them suddenly stopped buying from us completely (an exaggeration), we’d lose only 150 billion in sales. That’s only about 1% of the U.S. economy of about 15 trillion.
IMHO, the overborrowing of governments mostly hurts the holders of their sovereign bonds; mostly this is big banks, financials, funds.
Those big guys are using the scare tactic of financial collapse - in order to get the government to prop them up.
Which, of course, most governments can only do by borrowing even more which just makes the “bubble” pile of sovereign debt even bigger.
It’s like the only two players in the debt bubble are governments and large banks and some large investment funds.
The majority of the “system” being “heavily interlaced” is actually large banks and large investment funds that owe each other.
IMHO, a bank would not only survive but actually thrive in the event of such a “financial system collapse” if they have a limited amount of assets that are either:
a) sovereign debt
b) owed to them by another financial firm
and if they do not owe too much to other banks that would be collectible in the event of those bank’s bankruptcy.
As the amount of sovereign debt increases (at a faster rate than economies are actually growing), the situation only gets worse.