The US is essentially Washington and Wall St. The states and their populations are entirely peripheral. They could all go bankrupt locally, but as long as Washington still has tanks and Wall St still has bullies, thieves and rating agencies, the US will continue to appear solvent.
The EU is essentially everyone. Without a single centre of power or centre of finance - and neither Brussels nor the ECB count - this creates the perception of decentralised vulnerability.
The reality is that both Washington and Wall St are rigid and stupid to the point of smug catonia. They only appear solvent because of fraud and bluster.
Currently the plan is to talk down the Euro precisely because the dollar is getting its arse kicked, and both the Fed's and Wall St's finances are so precarious.
There's a small but non-zero chance this attack - and it's not a talking point, it's a deliberate economic attack - is going to backfire badly.
I suspect Greece will roll over on this one.
But there will be future attacks. And all that's needed to implode the dollar is one significant failure.
On the other hand:
Euro Falling, US Recovery Under Threat « The Baseline Scenario
Competitive depreciation is of course a no-no in international policy circles. But if your dissolute neighbors - with whom you happen to share a credit union - threaten to implode their debt rollovers, and makets react negatively, how can you be held responsible? Germany and France have no objection to euro depreciation - they are confident that the European Central Bank can prevent this from turning into inflation.
Competitive depreciation is of course a no-no in international policy circles. But if your dissolute neighbors - with whom you happen to share a credit union - threaten to implode their debt rollovers, and makets react negatively, how can you be held responsible?
Germany and France have no objection to euro depreciation - they are confident that the European Central Bank can prevent this from turning into inflation.
