US Road to Bankruptcy Runs Parallel to France

We met a friend for a drink last night. He’s an American who has lived in Paris for twenty years.

“I’m glad you’re back here,” he began. “There’s no better place for an American to live than here in Paris. It’s much better here than in the US. Almost everywhere in the US you have to get in your car and drive somewhere – to a mall – just to get a cup of coffee. That’s no way to live.

“It’s much better here. Especially if you’re an American. Because you can pretty much ignore all the nonsense that goes on here. If you’re French, Paris isn’t so much fun. French salaries, after all the social charges, are too low to enjoy it. Besides, the French have to know all the social codes and stick to them. But we can do what we want. They just dismiss us as crazy foreigners. And if you’re French, you’ll get all worked up about what goes on in the government or in your business. Running a business here is a nightmare. But I don’t even read the local news. I’ve never paid any attention to what the government does. Why should I? I can’t even vote here.

“And if you’re French you have to worry about the country going broke. There is no way they can continue to pay all those people who are retired. They seem to live forever…and they’re very expensive. France is going broke. But it doesn’t bother me…

“Trouble is, America is going broke too.”

In terms of debt and deficits the country that most resembles France is the United States of America. Both are going broke. But so are many other “European” nations…and eventually, probably all of them.

There are the nations of Europe. Then, there are the nations of Europeans – Argentina, Chile, Australia, New Zealand, Canada, and the US.

The point is, most of them are going broke. Their model is exhausted. This was the social welfare model derived from Bismarck – take from workers; pay to non-workers. It was okay as long as the pool of workers was growing faster than the pool of non-workers. But that’s no longer the case.

Curiously, the nation furthest along on the road to bankruptcy is a non-European nation that picked up the model early, Japan. Already, there are more people retiring in Japan than there are people entering the workforce. Overall, the population is falling, while the number of people over 65 increases at 3% per year. In 1990, there were more than 4 people working for every retiree. Now there are barely two.

Practically all the European nations, and all the nations lived in predominantly by people from Europe…as well as Japan…are headed down this dead-end road.

Bill Bonner
for The Daily Reckoning

The Daily Reckoning