Europe (driven by Germany) has an export-oriented model, coupled with imposed suppression of domestic demand (debt brake in Germany, rules on deficits across EU imposed by Brussels) – that STRUCTURALLY leads to massive EU trade surplus (about 500bn USD per year).
This money is prevented to enter the EU market (to keep EUR therefore exports competitive and salaries low) – so it has to be invested and kept in dollars OUTSIDE the EU. As pre-2008 the US did not run a large fiscal deficit, there were not enough treasuries available, but there was a huge demand for AAA USD bonds (mainly from Germany). So the market created subprime mortgages in which this money was placed. The toxic debt landed in Europe – wrecking the EU balance sheets, NOT that much the US ones.
Post 2008 – the US pressed the pedal – printed money, invested in digital and AI, powered ahead. Europe – pushed by Germany – went into further demand suppression and regulation – while not cleaning its balance sheets (we have still a zombie bank system). For Germany economically – this was partially compensated by cheap Russian gas. We just got by, with zero growth in the Eurozone. Now the situation is simply catastrophic. Unless we change the model of Germany, and allow the half trillion per year to be recycled in smart investments in Europe, allow mutualization of debt and large deficits – Europe will die.
This reform however would take out Germany from its primus inter pares center – which they will refuse (and they are locked into this anyway constitutionally). So the EU is fully doomed. The 4th Reich is collapsing (this is what the EU is). As the previous 3.
