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Comment by kavalg | Hacker News Reader

But I am having a hard time identifying this union/nation. Unfortunately, it feels like the EU is set on a downward trajectory.

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I'm a bit baffled by this - are you saying that you can't identify a single market in the whole world that is worth to invest in & stable except US?

Also I don't see that EU as a whole is on a downward trajectory, there are a lot of areas that are super strong, one being the defence industry.

US on the other hand - who wants to invest in or trade with them when they treat the rest of the world (including close friends) as shit.

You can’t invest in EU sovereign debt though, only the constituent countries.

The problem is that US treasuries have a bunch of features that can’t be replicated because of the size of the US economy. The only choice that comes close is China whose bonds are too illiberal to trade the same (and China has no interest in liberalizing them).

You can actually, but the volumes are too low to absorb a massive sell-off of US treasury paper.

It’s not just that the market isn’t deep enough. The current incarnation of EU bonds are not secured the same way typical sovereign bonds are. And they sort of can’t be without the member states ceding more sovereignty.

We’ll see if the EU member countries can approve a framework for bonds that are closer to a treasury in its guarantees, I’m skeptical but it could happen, but they don’t exist right now.

As they say: under enough pressure everything becomes a liquid. The current situation is in many ways unprecedented and I think that Trump may well be the antagonist that forces the EU to band together more effectively.

So the EU should issue more volume and establish a strategy to start rotating from US debt to EU debt. No one is calling for dumping $8T of treasuries on the market overnight; it's entirely reasonable to start issuing Euro debt and communicating the expectation to start selling down US treasuries to European entities that hold them.

"Plan the work and work the plan."

Yes, they should. The interesting bit here is that the USA has been an endless sink for funds simply because they have been spending way above their means, and that this worked in large part because there was trust. Breaking that trust is super risky from a US point of view. Europe has been more conservative in their spending and as a result needs a place to park their excesses, because there are not enough ways to spend those internally. I think that this is a luxury problem to have, but at the same time I realize that financing the USA any further is something that is not responsible from an EU perspective.

It’s also part of the reserve currency dynamics. It’s not clear how the modern bond market will work in a post dollar world, we frankly don’t have an example.

It’s entirely possible that the EU can overcome the political struggles that a true EU bond brings about (I’d love to see how a bond would work that both the Hungarian and Danish and French and Greek governments would back long term) but it seems just as likely that each country will hold bonds in lots of countries, probably in some similar relationship to their trade imbalance.

But this is not some unmitigated win for the EU, there is just as likely to be really inefficient and riskier outcomes for everybody as there is some karmic punishment for the States for allowing Trump to run amok.

Indeed, this is both complex and risky, but it is fairly clear by now that we need to do something concrete rather than just yak about it. Hungary is indeed a problem (and has been for a long time) but I'm actually impressed with the restraint shown by the bloc to let Hungarians deal with this on their own terms as long as it does not stop the EU from handling foreign policy.

The trade imbalance angle is exactly the one that I think they will pursue because that is the one that can be made to work numerically, but great care should be taken to ensure that Germany does not end up with a disproportional amount of power. In a way the EU being fragmented but forced to work together is the best recipe for a fair outcome though the larger entities will probably always have some minor advantage in such constructs.

Looks like it's starting. Kudos for some courage and will on the EU's part.

Macron says €300B in EU savings sent to the US every year will be invested in EU - https://news.ycombinator.com/item?id=46722594 - January 2026

Macron says €300 billion in European savings flown to the US every year will be invested in Europe from now on. All 27 EU states agreed to establish the S&I Union, a step toward the full Capital Market Union - https://old.reddit.com/r/europe/comments/1qjtvtl/macron_says... - January 22nd, 2026

https://streamable.com/m4dejv

Savings and investments union - https://finance.ec.europa.eu/regulation-and-supervision/savi... - December 4th, 2025

Not "worth to invest in," just the higher criteria GP asked for: "a more politically stable nation state." It has to be strictly more stable than the US, not just investable.

Switzerland is usually the gold standard for politically stable.

In the context of sovereign debt, yes. I don't even feel that that the US is stable enough. Of course, everyone sees the world through their own eyes, but in my world, the EU has been going down post-covid in terms of e.g. purchasing power, industrial base, business opportunities for the small/medium business. The defense industry is strong, because it is currently needed and funded, but how long can that be sustained?

I mean there is a second almost if not more critical requirement which is has a big enough and liquid enough debt market to function like US treasuries.

> Also I don't see that EU as a whole is on a downward trajectory

That's an extremely contrarian take that you can't justify with EU defense did good for once in it's life. Maybe we'll see something from the EU but remember the USA and EU GDP were basically identical 10 years ago now the US is 50% bigger.

Seriously in 2008 the EU had a bigger GDP and now is a fraction of the USA and member nations have done basically nothing to fix the core issues that left them behind.

> US on the other hand - who wants to invest in or trade with them when they treat the rest of the world (including close friends) as shit.

Sadly it doesn't really matter about a "want" it's a need at this point unless people are going to cut off their arm and collapse their own economies they don't really get a choice.

Fair, but a bit slower growth than US is not a downward trajectory. Also there is currency effects involved.

Isn't US injecting a lot of loaned money into the economy in a rate that might not be sustainable long term? Their debt-to-GDP ratio is way higher than EUs?

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