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.
You guys are forgetting history.
One Example: The Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion.
The crisis started in Thailand with the financial collapse of the Thai baht after the Thai government was forced to float the baht (due to lack of foreign currency to support its fixed exchange rate)
If a lowly country on economic ladder such as Thailand can cause a worldwide crisis, you betcha European meltdown will be much harsher. But I will agree it will affect US less than South-East Asia, especially China & S. Korea.
Simplistic
True, but with our GDP "growing" at about 1/4% in the last quarter [non-annualized but true figure,] that 1% would put us officially back into recession.
Exporters would shed jobs, curtail capital purchases, and the cascade would build from there. Growth and decline both happen at the margin. A drop in exports of that apparently small magnitude could be very damaging.