European Debt Crisis: The Personal Finance Analogy

[ng_nighthawk]

I finally heard something very simple this morning that made the debt crisis make more sense to me. It allows me to make analogies to personal finance, and then see why those analogies fall apart. So I thought I'd spell all that out, but first the easy explanation

Comments

[walrusjester]

In lieu of a useful comment, I'll add something for your consideration. An idea floated by historian Tony Judt is that the modern European welfare state (with its attendant fiscal obligations) arose as a deliberate response to the events of 1914-1945. The large-scale wars and totalitarian societies, he posited, were seen as coming from the economic hardship of the common people. So Europe was willing to incur debt in exchange for social stability. Whether or not this was a valid connection, it did perhaps pull their calculations out of the realm of pure economics.