Macron is making up numbers. Unless the EU member states actually impose capital controls, investors will continue to send their capital wherever it can earn the highest returns. Profitable investment opportunities in the EU remain slim and so far they seem uninterested in pursuing a growth policy.
Indeed it sounds a lot like Trump's bs, so Trump might buy it. It's almost like "those s**hole countries sending is their worst to eat our cats and dogs" or "subsidies we send every year to all over the world".
Except in a floating exchange rate that isn’t what happens. For somebody to leave the Eurozone for the Dollar zone there has to be somebody coming in the opposite direction to exchange with.
Macron is still talking nonsense of course. The Euros never left in the first place.
Correct. They don’t. It’s an illusion caused by where the accounting boundary is drawn.
That’s why “imbalances” never close.
If goods and services were exchanged for little models of the Eiffel Tower nobody would say there was an imbalance. Yet we do when we exchange for Euros.
> Unless the EU member states actually impose capital controls, investors will continue to send their capital wherever it can earn the highest returns.
You don't need to introduce capital controls to make it unattractive to invest in the US. There are plenty of options that the EU could pull that would make investments abroad very unpopular quickly.
By taking inspiration from the US. The US has PFIC for instance and many other reporting requirements that make it more attractive to invest in the US than abroad.
The EU can barely get the Mercosur FTA out the door. How can it even attempt to make such a drastic change that would make FDI in the EU less attractive than equally large and equally onerous China?
And that ignores the fact that states like Poland, Ireland, and Czechia would ferociously fight back at anything that threatens their FDI driven economies.
Even Ireland opposed the Anti-Coercion Instrument [0] four days ago, and everyone still remembers Belgium's unilateral opposition to seizing frozen Russian assets barely a month ago.
That Europe is incapable of doing anything bold is a different topic. You don't have to tell me how fundamentally screwed we are because of the consensus issue. But Europe could, without introducing capital controls, implement something. The US did, there is no fundamental reason why Europe could not either.
If something is hypothetically possible but practically impossible, then the mental exercise is a waste of time, and distracts from thinking about an actual solution.
For example, Trump could impeached and removed from office, but that isn't happening. So what's the solution?
I exclusively responded to a comment about capital controls, which are even less likely. I'm not particularly interested in a discussion about what politicans might or might not do.
I think if people were forced to invest their pensions in shitty EU stocks there would be push back. Also moving public sector pensions into EU stocks won't deliver the growth required, they are already unsustainable.
But there's a chicken and egg effect here in that the stock prices are low because of low investment and the stocks are bad because the stock prices are low.
For instance, Meta has basically doubled in price from a few years back but their business is basically identical. Doesn't seem very efficient to me, at least.
I doubt that. Investment firms exist to find an edge. Any mispricing would be eventually exploited because the incentive to do so is so huge. That's what value investing is.
Let me fix that for you. This is all happening because the institutions in America failed to deliver for working-class people for over four decades, and Americans got fed up, elected a billionaire willing to be a bulldozer of those institutions and the systems that work for knowledge workers, twice.
Who knew that cutting taxes while keeping government spending high AND lowering interest rates could result in so much free money going around? That coupled with the dollar losing 10% of its value in a year, of course stocks are higher than before. Inflation and dollar losing value = winning!
>Who knew that cutting taxes while keeping government spending high AND lowering interest rates could result in so much free money going around?
That's been going on for many presidents in a row, in no way unique to Trump. Bush and Obama take the cake.
>That coupled with the dollar losing 10% of its value in a year
Is this some new virtue signal on BlueSky? USD is still trading in its channel at above historic averages. This is like saying the US market is crashing because we had a -2.5% day on Tuesday. Look at DXY and zoom out. It's been flat since May.
>of course stocks are higher than before. Inflation and dollar losing value = winning!
Three consecutive years of solid double digit market growth that has outpaced inflation and dollar valuation. Tell me you know nothing about financial markets without telling me you know nothing about financial markets.
> That's been going on for many presidents in a row
You were attributing your "knowledge worker 401(k)" growth to Trump though?
> Is this some new virtue signal on BlueSky?
No, I'm not on BlueSky or any social media. Is this a poor attempt at some Trumper "own"?
> USD is still trading in its channel at above historic averages.
Look at the chart after "liberation day" in April. It's been down since then and stayed there. Not a very good sign for his policies.
> Three consecutive years of solid double digit market growth that has outpaced inflation and dollar valuation
I agree, Biden did well with covid recovery. Not sure how electing Trump did much for us other than cause a market crash in April (and subsequent dip buying) and weaken the USD?
> Tell me you know nothing about financial markets
Oh, I know plenty and I'm actually bullish on stocks because there is so much free money going around. It would be stupid not to have your money in assets with such high inflation on the horizon. I just find it funny that you're touting bad policy as a win when his whole campaign was about "Biden's inflation" causing high prices and Republicans are supposedly for being fiscally responsible yet the OBBB goes against that.
>You were attributing your "knowledge worker 401(k)" growth to Trump though?
You were attributing the "cutting taxes while keeping government spending high AND lowering interest rates" specifically to Trump though?
>No, I'm not on BlueSky or any social media.
Yet you suffer from the same brainrot.
>Is this a poor attempt at some Trumper "own"?
Is this a poor attempt at some pantifa "own"?
>Look at the chart after "liberation day" in April. It's been down since then and stayed there. Not a very good sign for his policies.
Yes, it is still trading in its channel at above historic averages. A regression to the mean, the same drop happened under Biden in 2022. Not a good sign for [Biden's] policies.
>Not sure how electing Trump did much for us other than cause a market crash in April (and subsequent dip buying) and weaken the USD?
Of course you're not sure because you're financially illiterate. We're hitting all time highs again.
>Oh, I know plenty and I'm actually bullish on stocks because there is so much free money going around.
ZIRP is over. You're bullish because the market is hitting ATH under Trump. I've been selling puts all year to gullible "investors" that thought, and still think, the market is going to crash, any time now, under Trump.
>It would be stupid not to have your money in assets with such high inflation on the horizon.
"Inflation is on the horizon!" they screamed for an entire year. Trump's first year of his second term CPI was 2.7%, lower than any Biden year.
>I just find it funny that you're touting bad policy as a win when his whole campaign was about "Biden's inflation" causing high prices and Republicans are supposedly for being fiscally responsible yet the OBBB goes against that.
People find things they don't understand funny, news at 11.
> Let me fix that for you. This is all happening because the institutions in America failed to deliver for working-class people for over four decades, and Americans got fed up, elected a billionaire willing to be a bulldozer of those institutions and the systems that work for knowledge workers, twice.
Let me fix that for you. Billionaires conned working class into giving up everything for "low taxes". Working class suffered.
And then the same working class elected - get this - another billionaire conman - the same category that previously conned them.
Canadian tourism visits to the US have dropped massively in the last year, not because Canadian tourist spots are better or more fun now (e.g. pure market forces), but again because of politics:
Contrary to the implication, the Swedish fund that possibly sold $8b of its $100b worth of US Treasuries did not cite politics as its reason for doing so, and no part of the article backs up that claim. Additionally, selling out of the US dollar as the fed aimed to cut rates and as the dollar declined from historic highs against the Euro seems sensible regardless of politics.
Denmark has been exiting foreign bonds for 10 years, down from a high of $24b in 2016 to $10b in 2025. It’s not only part of a trend, but the cited $100m of bonds sold makes up a negligible 0.00026% of US treasuries.
On that note, 1 USD buys nearly $1.40 CAD.
Politics makes it easy to write stories that paint an incomplete or incorrect picture.
>Contrary to the implication, the Swedish fund that possibly sold $8b of its $100b worth of US Treasuries did not cite politics as its reason for doing so
To be fair, the Swedish pension fund specifically cited the US's "large budget deficits and growing government debt" for why they saw it as higher risk. That sort of thing is 100% politicians.
The cited rationale is a perfectly reasonable take.
But most of the world is in the same boat of "large budget deficits and growing government debt". It will be "interesting" for bond issuers and most investors and "exciting fishing" for hedge fund sharks over the next 10 years or so.
That said, I do not agree that it is 100% politicians. At least in the US, that path has been virtually unavoidable after the fiscal spending by G.W. Bush on the 9/11 wars and fully set in stone after 2008 subprime crisis. For the last 15+ years politicians could slow down or speed up the transit a little, but getting off that train has not been an option. My 2c.
Its worse than you think: The United States is currently experiencing a massive, accelerating debt crisis, with the gross federal debt surpassing $38 trillion as of late 2025.
It is growing by $1 trillion roughly every 82 days.
This debt level, which has exceeded 120% of the U.S. GDP,
To be fair, the US has been growing its federal debt my whole life. It is one of those things that seems unsustainable but then it continues. Of course, it is sustainable because of US dollar dominance in the world and that may be faltering with Trump, especially if the Federal Reserve loses its independence.
Every sentence here seems reasonable, weird to see it gray.
I really do wonder what's going to end up happening with the debt...I think we've crossed the point of no return, but I'm not sure. Interest on the debt now exceeds military spending, and US military spending is about 40% of all NATO defense spending.
I've thought about this since I was young, and was fascinated that no one thought it was going to become a problem. There was a nice moment in the late 90s where the US reduced debt, but that was a blip.
Hyperinflation is most likely, pay the debt with useless dollars. Other option is Debt Jubilee, which the Gov't would need to force lenders to write off the debt.
All the petrodollar stuff seems like they are trying to keep the dollar valuable while it hyperinflates AKA knock everyone else's value down while being the most valuable even if it is like $1 trillion to $1 today
Yeah politics or not, the US stock market has a very high exposure to just a couple tech companies, and many of these companies have a very high P/E, and likewise hugely invested in AI (which itself is a risk). Add to that the recent (entirely self-inflicted) geopolitical questions of US reliability, I think it's a smart idea to reduce US exposure in one's portfolio.
Circling back to AI, my (not politically motivated) opinion, is that most of the tremendous supposed value was priced in into AI stock back in 2024, with 2025 gains being either relatively modest or stagnant. With the risks involved, I think it's fair to expect that AI companies can go down a lot, but it's hard to imagine them going up by that much.
Like, for example if NVIDIA gained another $1T in market cap, that'd increase the stock price by 22%, but if they lost that much, it would make it go down by 36%. If we consider both outcomes equally likely (not suggesting this is a reasonable assumption), we're more likely to lose money.
They can, but that invites retaliation. If they do it on all non-EU trades that is in effect an attack on investment in every non-EU economy. There are all sorts of consequences.
There are practical difficulties too. What is the investments are made through an off-shore subsidiary or by investing in a fund in the US? It might even encourage the latter (single trade to buy the fund instead of managing US investments) and mean management fees move to the US.
If they impose it on just US trades it might still be subject to the problems above and would be a very serious step and one investors will hate.
I think we might well end up with something like this and a return to more money going to national capital markets rather than global, but its not going to be an easy transition.
The EU has $8T invested in US assets. That's not an easy choice like a soccer mom choosing to go to the Caribbean instead of Florida for a weekend. It's very serious business that needs real alternatives.
There's literally not enough gold in the world to make a difference at those scales. And while gold can serve as a (relatively) safe store of value, ultimately investors need to earn returns and holding gold has negative cash flow.
You sell into the market and buy a replacement asset. Easy peasy. No need to sell all at once, you simply change your strategy to invest new capital elsewhere and slowly roll off existing debt ownership.
Over time, the US will need to find someone willing to buy new US debt as existing buyers and holders invest elsewhere.
You definitely cannot do it all at once, all you can do is what China and India are doing, which is to slowly sell US treasuries over many years. China used to hold $1.3T of US treasuries but they now only hold just under $0.7T, thus about half has been sold. India similarly has reduced their holdings from $240B to $190 over the last year. It can be done, just not quickly.
Stocks generally survive currency devaluations, but treasuries do not. So I am not a fan of treasuries in this environment, but US stocks should be fairly resistant except for their dependency on the US economy, which could be disrupted in a currency devaluation.
> What are they going to swap 8 trillion dollars into?
For African raw materials, Chinese commodities and components, etc - like everybody else with lots of $$. If you're paying attention, that also means higher inflation in the US.
Thanks, GOP geniuses... of course the rich, of which the admin is full of, love inflation because it makes them richer. If you complain about something, they'd blame China and Maduro, mission accomplished!
Those are thin markets, and not necessarily even open to most EU investors. Also, good luck getting your investment back when there's another coup or civil war in the target country.
Major investors have always had some level of international diversification and that will continue. But this recent EU move won't have any significant impact.
> Those are thin markets, and not necessarily even open to most EU investors... coup or civil war in the target country.
I didn't say anything about "investing" in any closed markets or target countries. This isn't complicated but I'm sensing some entrenched and overly optimistic preconceptions getting in the way.
It becomes complicated pretty quickly if you're trying to deploy large amounts of capital into small, unsophisticated markets regardless of whether you label it "investing" or something else. But you seem to be confused about how this stuff works in the real world.
This is talk about not investing more in the US though, is it not? Why it the top discussion so misconstrued about what is being said/reality? €300B <> $8T, yet somehow that is the discussion?
Counter argument: people invest in bonds. Quite a lot of bonds in fact.
Picking up pennies in front of a steam roller and counterparty risk seem to be perennial favorites of youth, but I hazard to guess only a minority in the market have flesh yet untouched by fire.
Unfortunately the US Dollar is devaluing. In the past year the dollar went down by 11%. That means SP 500 which has gone up 13% in the past year has only gone up 2% for a European.
Well no thanks, the US is going the same path Hungary and Turkey, just with a 10 year difference, autocrats are never good for business.
As soon as Trump came in power I sold all my dollars and I was wise to do it.
Expect things to go much more worse from here, this is only the beginning. For now the FED has relatively been untouched, it's not going to stay pristine forever.
yup, by going after Powell he is threatening the rest of them to vote the way he wants in the future.
While it would be great if people of the US started to show some backbone and resist this fascist takeower, I'm quite pessimistic. What's going on makes me really sad.
OTOH it's not too late!! We have seen trends like this turned around before.
It's a matter of perspective, for the US administration, that 11% drop is reason for celebration.
Their goal is to make American blue collar manufacturing jobs viable again, and part of the plan is to make it cheaper for other countries to buy their goods.
It's not the first time the dollar has been intentionally devalued.
Pension funds around these parts are big, we are often forced to pay into them.
Years ago, I noticed they started advertising green funds. Would not be surprised to see options that exclude the US too.
If you look at Trumps polls across EU countries, it is heavily in the negative and a lot of us are wanting to put our money where our mouth is about it.
Not really. Most EU countries don’t even have noticeable state pension funds (and one of the biggest culprits is actually France). They just rely on younger people to support the pensions of the retired ones.
Not in France they aren’t. And not in most EU countries that still rely in pay as you go pension systems.
For comparison. France’s pension funds (total public and private) are 12% of their GDP. Total EU pension funds are also around 20% of total EU GDP. USA pension funds are 170% of their GDP!!!
Yes, we have a pays-as-you-go pension system in Denmark (sigh). But regulations were also changed a while back such that employees must pay into a pension scheme of their own.
In our case, that's handled via your employer and there's a minimum contribution limit and often incentives to pay a higher level.
that's true to some extent, but at this point it's mostly a meme (at least the 60% number was)
> In 2023, 54 percent of adults said they had set aside money for three months of expenses in an emergency savings or “rainy day” fund—unchanged from 2022 but down from a high of 59 percent of adults in 2021.
That’s way higher than I’d have guessed. Maybe there is some sort of bimodal distribution happening there. Half the pop is flat broke the other has multiple months of buffer
There's no "enforced savings" that I know of in Europe.
3.50% in the US sounds extremely low to me. It has fallen a bit recently but the savings rate was about 25% in France in 2020. Common knowledge says to strive to save at the very least 10% of one's revenue around here.
There is a very large and growing portion of the US that maintains no savings at all. In fact it's the opposite and many are slowly spending their way into perpetual credit card debt.
It's essential to the way the system works. One person's money is another person's debt. Normally the government would take on enough debt to ensure everyone had money, but the USA is a weird case.
Money and debt are just mechanisms to allocate resources. The government can print infinite money like Zimbabwe and it wouldn’t matter if there aren’t enough resources to allocate.
It seems like savings include pension ([1], but it is a bit unclear to me) , and that is a kind of forced saving (as in many places in Europe you can't choose to not get pension and get it as cash to spend instead).
It's not clear to me either, but as I understand it it doesn't include pensions because social contributions are not part of "disposable income".
I think that "the net adjustment for change in pension entitlements" is there to take into account the expected reduced future income from pension entitlements dwindling over time (edit: in effect, making pensions count as negative savings) somehow, but it's unclear.
I looked for another perspective but the French national bank doesn't mention pensions in its explanations[0].
Even the poorest EU countries are actually surprisingly wealthy.
Bulgaria was switching to Euro on the new year’s eve and the easiest way to convert Leva to Euro was to put the money into the bank, so Bulgarian deposits reached 100B+ levas into personal accounts by November which converts to ~50B+ Euros. Which is over 10K Euros per Bulgarian adult. Not bad for the poorest country, considering that home ownership rate is also very high(%86 IIRC).
The life is pretty good for a GDP per capita of $18K.
Home ownership can be a deceptive stat in Eastern Europe - many people don't register their address at the place they rent - in part because they're renting it under the table.
Tons of folks also live with their parents into their 30s.
The Spanish taxman announced this week they will consider a taxable gift when adults live at their parents home. Anything to keep the juicy inflation-adjusted pensions and their votes.
When people talk about EU home ownership, savings, etc. they often neglect to mention the skew of the Boomer class. It really sucks for young people.
The US can always print more money to fund its institutions, but other countries have to save theirs. Sure, they can print more euro but when so much stuff they need is traded in USD, that's not nearly as effective as when the US prints more USD.
Our public transportation infrastructure is so badly managed that many jobs will ask you if you have reliable transportation and fire you if you find yourself without it. If your car breaks here it's often not really a option to save up for a bit first.
Retirement accounts are more like social security than 401k. There’s no set amount of euros set aside for me it’s all in the pool paying for older peoples retirement
The Europeans I know seem to save in actual bank savings accounts, whereas the Americans I know seem to invest their money. Maybe I'm not looking hard enough, but I can't find a description of "savings" on those charts, so I think it might be ignoring American investments. To me, they are both types of investment, one a super safe option with a low return, and the other a more risky option with a higher return.
From that Draghi paper a year ago or so, I believe part of Europe's innovation problem seems to stem from a lack of private investment by individuals in this way, so that would also align with this different philosophy on dealing with savings.
Practically, yes. But in economics they often classify “savings” only as being in a bank account. So if you “save” money in a 401k, where it’s invested in stocks, bonds or ETFs or whatever, then it’s not recorded as savings because they consider that “investment”. So when someone says EU saving is 18.79% vs US saving of 3.50%, most of the wealth saved by Americans isn’t showing up in that comparison because it’s not in a bank account.
If it is just a matter of classification, then why would part of the problem lie on lack of private investment, when private savings are invested by the banks themselves ?
I think a big a part is that a lot of EU money is invested in the US instead, and I am looking forward for that to stop..
There’s a whole lot of regulation around the types of investment a bank can make with the money. Most of it has to be low risk mortgages, loans and high quality bonds.
I'd argue accumulating too much wealth compared to your salary can be a bad thing - for example, real estate compared to salary is even more expensive in Europe than the US - so the extra money doesn't go anywhere useful, you just get to pay more for the same stuff.
Also, if the US person pays less taxes, but has to pay for a bunch of services that the EU person would get for free, that means the US person has a lower savings rate, even though they're paying for the exact same stuff.
What makes it more ridiculous, is that fact that we from the EU are shouting US is getting isolated, but some of the biggest economies in the world do not want to trade with 4 countries from the 3rd world, because we think will get bankrupt because of that.
It's because of agriculture and us here in Europe losing our food-related resilience because of that. The tertiary sector won't save you in case of a continental blockade and the Argentinian/Brazilian grain suddenly becoming unavailable. "We'll go back to our farmers here in Europe!" Oops, you've just pushed them into bankruptcy a few years ago as a result of Mercosur, so good luck with that.
Well that doesn’t seem to matter in another areas of the economy… meanwhile in Germany we are experiencing an historical de-industrialization. I don’t see nearly as much fuss about that.
Severely downsizing or shutting down the military production, how has it been working to get it running again so far? And now imagine if Germany wouldn't have the luxury of hiding behind the Ukrainian/American/Polish/Finnish backs and would have to actually fight the war at the same time.
Well, returning the food production while the population is starving would have been an even harder problem.
I'm sure everyone would be happy to purchase stuff that respect our own standards. We forbid our farmers to use some chemicals because they are bad for health and nature, it would be completely stupid to start purchasing food abroad that is made using those chemicals, don't you agree?
Sorry, the standards imposed to meat from south america is way higher than the European. Wine is nearly impossible. And spicies like paprika also require higher standards than in Europe. I don’t know what you mean with that. Free trade does not mean there are no standards to met. Same standards will be imposed (as are already imposed) to anything imported in the EU. Also in south America, because of size you don’t need nearly as much chemicals as in EU anyway.
Last but not least, that of quality standards and chemicals doesn’t hold anyway, as there are already loads of products coming from those countries already… I look always where things come from, and fruits come up to 80% from South America (including Mercosur). Dang even apples from Argentina in Germany, which is frankly non sense to me! It’s just not about quality, is good all protectionism and imposing tariffs, just as Trump is doing, but if we do, is ok.
Yes, I agree with the standards, but has absolutely nothing to do whatsoever with the agreement Mercosur/EU. The standard will be imposed for ANY product sold in the EU, doesn't matter where it comes from, as it should be.
Do you have sources for what you say for meat for example? From what I could read on this topic, they don't have the same traceability constraints, may use growth hormones that are forbidden here, etc.
To add to the absurdity, one of the thing we Europeans will be able to export more to SA is chemicals, including those which we forbid here because they damage health and environment...
Or people exporting meat I happen to know. Independent of all requirements for anything in the EU, that of course has to be met, they will ask for lots of things above and beyond. That is the reality of the market. If you want to play with such a big market, it won’t be easy.
I know a guy who had paprika plantation, wanted to sell to Germany. They asked conserved samples of the last 20 years to guarantee consistency. That is just not normal.
Ah yes ok, that some high quality importers are careful and asking higher standards I totally believe it, and can easily understand that they might ask even more guarantees than from the farm next to them.
But there are always buyers for the cheapest products too.
> but some of the biggest economies in the world do not want to trade with 4 countries from the 3rd world,
It's this attitude that makes non-Europeans (especially those of us without European heritage) less sympathetic to European pleas of support, yet it's your politicians that try to sign a defense pacts with "third world countries" like India [0]
Offence is taken, not given. I think it's an overreaction trying to find something to get offended about, instead of seeing the essence of what the parent was trying to clumsily say.
It's hard to overstate how much a beating the EU's reputation took after the Mercosur fiasco.
Lula took a massive political risk to push the EU-Mercosur FTA despite the power behind the throne in Brazil being wooed/bribed by the Trump admin [0] and already on the fence about the EU-Mercosur FTA because they are Ag Barons that primarily trade with the US and China [1] AND during a hotly contested election year.
This only makes the EU look like a less attractive negotiating partner, and incentivizes countries to unilaterally negotiate with individual EU states instead of the EU as a whole, thus undermining the entire EU.
If the EU alienates China, the US, Russia, Brazil, India, ASEAN, Japan, Korea, etc who else is left?
That is the whole crux of Carney and Zelenskyy's speeches at Davos.
> US is still unable to get a free trade deal with mercosur
Instead, we get an REE extraction deal in Brazil [2], financial backing for our current Venezuela escapade [0], and a president exporting Hispanic American-style far right politics into EU member states like Spain [3] and Italy [4] where right-leaning South Americans have become a major political voting bloc.
The more isolated the EU becomes, the easier it is for countries to begin taking advantage of European nations on their terms.
Edit:
The EU is now unfreezing and ratifying the US-EU trade deal [5]
Why link to some reddit thread? I watched the video, and he described divestment from US bonds and equities. Those are easily some of the most desired, and consequently overvalued, securities on the planet. If European divestment actually exerts downward price pressure, that would mean ordinary Americans investing for retirement would be able to buy them up cheaper. Is that a bad thing? Also, it would mean Europeans would be less able to reap the benefit these corporations' profits and growth.
So, how is this going to work? Is he talking about the French Ministry of Economics and Finance? About the Banque de France? About the the ECB? Afaik the last two are, nominally at least, independent, while Macron is just a politician representing one of the 27 EU countries, so what authority does he have? What do the political leaders of Latvia think about this? Or of Malta?
Individual investors can buy whatever they want. The idea is to be competitive with the US, so that indices like MSCI World are more than just thinly-veiled S&P500 indices.
Funny that of all people, Macron says that. Just a few months back, France government bonds lost their AAA rating because Macron refuses to pass legislative reforms. All while the EU biggest powerhouse economy - Germany - has remained stagnant or is even shrinking. Good luck convincing investors to not buy US bonds with that outlook.
So, the president of a socialist country (a country where the government spenditure is 57% of the total GDP is a socialist country [1]) is now saying their citizens that they will be stopped from investing the little money the state allows them to keep wherever they want, and be forced to invest in their faulty economy.
That’s it, right?
There’s a reason Europeans mostly invest in US stocks: they are much more profitable because the US doesn’t tax to death and regulates to death their own companies. Maybe France and the rest of the EU should try the same.
If you are rich enough, it isn’t rocket science to avoid capital gains taxes in the EU. And by rich enough, just a few hundred K. (See the related FIRE Reddit boards)
Macron is making up numbers. Unless the EU member states actually impose capital controls, investors will continue to send their capital wherever it can earn the highest returns. Profitable investment opportunities in the EU remain slim and so far they seem uninterested in pursuing a growth policy.
Maybe, but so does Trump. And that’s who these figures are really meant for.
I doubt it will make any difference though, because Trump is about as brain damaged as they come.
Indeed it sounds a lot like Trump's bs, so Trump might buy it. It's almost like "those s**hole countries sending is their worst to eat our cats and dogs" or "subsidies we send every year to all over the world".
Except in a floating exchange rate that isn’t what happens. For somebody to leave the Eurozone for the Dollar zone there has to be somebody coming in the opposite direction to exchange with.
Macron is still talking nonsense of course. The Euros never left in the first place.
> For somebody to leave the Eurozone for the Dollar zone there has to be somebody coming in the opposite direction to exchange with.
Does that mean trade imbalances don’t exist?
Correct. They don’t. It’s an illusion caused by where the accounting boundary is drawn.
That’s why “imbalances” never close.
If goods and services were exchanged for little models of the Eiffel Tower nobody would say there was an imbalance. Yet we do when we exchange for Euros.
> Unless the EU member states actually impose capital controls, investors will continue to send their capital wherever it can earn the highest returns.
You don't need to introduce capital controls to make it unattractive to invest in the US. There are plenty of options that the EU could pull that would make investments abroad very unpopular quickly.
Those are capital controls by another name.
but not necessarily capital controls by a similar legislative difficulty, although at this point it's somewhat abstract what is being discussed.
Like how…?
By taking inspiration from the US. The US has PFIC for instance and many other reporting requirements that make it more attractive to invest in the US than abroad.
Yea, but how?
The EU can barely get the Mercosur FTA out the door. How can it even attempt to make such a drastic change that would make FDI in the EU less attractive than equally large and equally onerous China?
And that ignores the fact that states like Poland, Ireland, and Czechia would ferociously fight back at anything that threatens their FDI driven economies.
Even Ireland opposed the Anti-Coercion Instrument [0] four days ago, and everyone still remembers Belgium's unilateral opposition to seizing frozen Russian assets barely a month ago.
[0] - https://www.reuters.com/world/europe/be-no-doubt-eu-will-ret...
That Europe is incapable of doing anything bold is a different topic. You don't have to tell me how fundamentally screwed we are because of the consensus issue. But Europe could, without introducing capital controls, implement something. The US did, there is no fundamental reason why Europe could not either.
It's just a question of political will
If something is hypothetically possible but practically impossible, then the mental exercise is a waste of time, and distracts from thinking about an actual solution.
For example, Trump could impeached and removed from office, but that isn't happening. So what's the solution?
I exclusively responded to a comment about capital controls, which are even less likely. I'm not particularly interested in a discussion about what politicans might or might not do.
I think if people were forced to invest their pensions in shitty EU stocks there would be push back. Also moving public sector pensions into EU stocks won't deliver the growth required, they are already unsustainable.
But there's a chicken and egg effect here in that the stock prices are low because of low investment and the stocks are bad because the stock prices are low.
For instance, Meta has basically doubled in price from a few years back but their business is basically identical. Doesn't seem very efficient to me, at least.
I doubt that. Investment firms exist to find an edge. Any mispricing would be eventually exploited because the incentive to do so is so huge. That's what value investing is.
> Macron is making up numbers
So is Trump. This is all just response to bullying.
"I got big muscles"
"Oh yeah, I got big muscles too"
This all is happening because America elected a criminal clown, twice.
Let me fix that for you. This is all happening because the institutions in America failed to deliver for working-class people for over four decades, and Americans got fed up, elected a billionaire willing to be a bulldozer of those institutions and the systems that work for knowledge workers, twice.
All politicians will say what people want to hear.
And how does that work for them?
Fantastic for my knowledge worker 401(k)!
Who knew that cutting taxes while keeping government spending high AND lowering interest rates could result in so much free money going around? That coupled with the dollar losing 10% of its value in a year, of course stocks are higher than before. Inflation and dollar losing value = winning!
Oh, and, of course, a deficit is a tax increase that's deferred to the future.
It's one thing to spend a deficit on something long-term useful, it's another thing to piss it away.
>Who knew that cutting taxes while keeping government spending high AND lowering interest rates could result in so much free money going around?
That's been going on for many presidents in a row, in no way unique to Trump. Bush and Obama take the cake.
>That coupled with the dollar losing 10% of its value in a year
Is this some new virtue signal on BlueSky? USD is still trading in its channel at above historic averages. This is like saying the US market is crashing because we had a -2.5% day on Tuesday. Look at DXY and zoom out. It's been flat since May.
>of course stocks are higher than before. Inflation and dollar losing value = winning!
Three consecutive years of solid double digit market growth that has outpaced inflation and dollar valuation. Tell me you know nothing about financial markets without telling me you know nothing about financial markets.
> That's been going on for many presidents in a row
You were attributing your "knowledge worker 401(k)" growth to Trump though?
> Is this some new virtue signal on BlueSky?
No, I'm not on BlueSky or any social media. Is this a poor attempt at some Trumper "own"?
> USD is still trading in its channel at above historic averages.
Look at the chart after "liberation day" in April. It's been down since then and stayed there. Not a very good sign for his policies.
> Three consecutive years of solid double digit market growth that has outpaced inflation and dollar valuation
I agree, Biden did well with covid recovery. Not sure how electing Trump did much for us other than cause a market crash in April (and subsequent dip buying) and weaken the USD?
> Tell me you know nothing about financial markets
Oh, I know plenty and I'm actually bullish on stocks because there is so much free money going around. It would be stupid not to have your money in assets with such high inflation on the horizon. I just find it funny that you're touting bad policy as a win when his whole campaign was about "Biden's inflation" causing high prices and Republicans are supposedly for being fiscally responsible yet the OBBB goes against that.
>You were attributing your "knowledge worker 401(k)" growth to Trump though?
You were attributing the "cutting taxes while keeping government spending high AND lowering interest rates" specifically to Trump though?
>No, I'm not on BlueSky or any social media.
Yet you suffer from the same brainrot.
>Is this a poor attempt at some Trumper "own"?
Is this a poor attempt at some pantifa "own"?
>Look at the chart after "liberation day" in April. It's been down since then and stayed there. Not a very good sign for his policies.
Yes, it is still trading in its channel at above historic averages. A regression to the mean, the same drop happened under Biden in 2022. Not a good sign for [Biden's] policies.
>Not sure how electing Trump did much for us other than cause a market crash in April (and subsequent dip buying) and weaken the USD?
Of course you're not sure because you're financially illiterate. We're hitting all time highs again.
>Oh, I know plenty and I'm actually bullish on stocks because there is so much free money going around.
ZIRP is over. You're bullish because the market is hitting ATH under Trump. I've been selling puts all year to gullible "investors" that thought, and still think, the market is going to crash, any time now, under Trump.
>It would be stupid not to have your money in assets with such high inflation on the horizon.
"Inflation is on the horizon!" they screamed for an entire year. Trump's first year of his second term CPI was 2.7%, lower than any Biden year.
>I just find it funny that you're touting bad policy as a win when his whole campaign was about "Biden's inflation" causing high prices and Republicans are supposedly for being fiscally responsible yet the OBBB goes against that.
People find things they don't understand funny, news at 11.
American voters elected the people who ran those institutions, or appointed the leaders of those institutions.
I know we all want it to be some shadowy cabal so we can pretend the average person didn't cause this, but it isn't. We did this to ourselves.
> Let me fix that for you. This is all happening because the institutions in America failed to deliver for working-class people for over four decades, and Americans got fed up, elected a billionaire willing to be a bulldozer of those institutions and the systems that work for knowledge workers, twice.
Let me fix that for you. Billionaires conned working class into giving up everything for "low taxes". Working class suffered.
And then the same working class elected - get this - another billionaire conman - the same category that previously conned them.
Politics drives decision making in addition to just seeking returns, especially for government affiliated funds, e.g.:
https://www.reuters.com/business/swedish-pension-fund-alecta...
https://www.cbsnews.com/news/danish-pension-fund-treasuries-...
(And remember that India and China combined reduced their holdings of US treasures by at least $50B in 2025: https://economictimes.indiatimes.com/news/india/amid-global-... )
Canadian tourism visits to the US have dropped massively in the last year, not because Canadian tourist spots are better or more fun now (e.g. pure market forces), but again because of politics:
https://www.bbc.com/travel/article/20251211-where-are-all-th...
Contrary to the implication, the Swedish fund that possibly sold $8b of its $100b worth of US Treasuries did not cite politics as its reason for doing so, and no part of the article backs up that claim. Additionally, selling out of the US dollar as the fed aimed to cut rates and as the dollar declined from historic highs against the Euro seems sensible regardless of politics.
Denmark has been exiting foreign bonds for 10 years, down from a high of $24b in 2016 to $10b in 2025. It’s not only part of a trend, but the cited $100m of bonds sold makes up a negligible 0.00026% of US treasuries.
On that note, 1 USD buys nearly $1.40 CAD.
Politics makes it easy to write stories that paint an incomplete or incorrect picture.
>Contrary to the implication, the Swedish fund that possibly sold $8b of its $100b worth of US Treasuries did not cite politics as its reason for doing so
Which doesn't mean it wasn't the reason.
Maybe it was more because the president is a fool and less because he is a jerk?
To be fair, the Swedish pension fund specifically cited the US's "large budget deficits and growing government debt" for why they saw it as higher risk. That sort of thing is 100% politicians.
https://www.thestandard.com.hk/wealth-and-investment/article...
The cited rationale is a perfectly reasonable take.
But most of the world is in the same boat of "large budget deficits and growing government debt". It will be "interesting" for bond issuers and most investors and "exciting fishing" for hedge fund sharks over the next 10 years or so.
That said, I do not agree that it is 100% politicians. At least in the US, that path has been virtually unavoidable after the fiscal spending by G.W. Bush on the 9/11 wars and fully set in stone after 2008 subprime crisis. For the last 15+ years politicians could slow down or speed up the transit a little, but getting off that train has not been an option. My 2c.
Its worse than you think: The United States is currently experiencing a massive, accelerating debt crisis, with the gross federal debt surpassing $38 trillion as of late 2025.
It is growing by $1 trillion roughly every 82 days.
This debt level, which has exceeded 120% of the U.S. GDP,
To be fair, the US has been growing its federal debt my whole life. It is one of those things that seems unsustainable but then it continues. Of course, it is sustainable because of US dollar dominance in the world and that may be faltering with Trump, especially if the Federal Reserve loses its independence.
Every sentence here seems reasonable, weird to see it gray.
I really do wonder what's going to end up happening with the debt...I think we've crossed the point of no return, but I'm not sure. Interest on the debt now exceeds military spending, and US military spending is about 40% of all NATO defense spending.
I've thought about this since I was young, and was fascinated that no one thought it was going to become a problem. There was a nice moment in the late 90s where the US reduced debt, but that was a blip.
Hyperinflation is most likely, pay the debt with useless dollars. Other option is Debt Jubilee, which the Gov't would need to force lenders to write off the debt.
All the petrodollar stuff seems like they are trying to keep the dollar valuable while it hyperinflates AKA knock everyone else's value down while being the most valuable even if it is like $1 trillion to $1 today
> 1 USD buys nearly $1.40 CAD.
Right before Trump (2024), 1.42 CAD at the top. During Trump, barely hits 1.40 CAD, one time it touched 1.37 CAD.
Yeah politics or not, the US stock market has a very high exposure to just a couple tech companies, and many of these companies have a very high P/E, and likewise hugely invested in AI (which itself is a risk). Add to that the recent (entirely self-inflicted) geopolitical questions of US reliability, I think it's a smart idea to reduce US exposure in one's portfolio.
Circling back to AI, my (not politically motivated) opinion, is that most of the tremendous supposed value was priced in into AI stock back in 2024, with 2025 gains being either relatively modest or stagnant. With the risks involved, I think it's fair to expect that AI companies can go down a lot, but it's hard to imagine them going up by that much.
Like, for example if NVIDIA gained another $1T in market cap, that'd increase the stock price by 22%, but if they lost that much, it would make it go down by 36%. If we consider both outcomes equally likely (not suggesting this is a reasonable assumption), we're more likely to lose money.
How much do EU government run funds invest in the US?
The governments can quiet easily influence private investment decisions by adding additional taxes to us-based market trades for example.
It'd be quiet easy if the EU governments actually wanted to do so - I'm not sure they actually do right now, however.
They can, but that invites retaliation. If they do it on all non-EU trades that is in effect an attack on investment in every non-EU economy. There are all sorts of consequences.
There are practical difficulties too. What is the investments are made through an off-shore subsidiary or by investing in a fund in the US? It might even encourage the latter (single trade to buy the fund instead of managing US investments) and mean management fees move to the US.
If they impose it on just US trades it might still be subject to the problems above and would be a very serious step and one investors will hate.
I think we might well end up with something like this and a return to more money going to national capital markets rather than global, but its not going to be an easy transition.
The EU has $8T invested in US assets. That's not an easy choice like a soccer mom choosing to go to the Caribbean instead of Florida for a weekend. It's very serious business that needs real alternatives.
As long as they lose less than they lose by keeping it in $ they're coming out ahead.
They don’t have a choice, they sell they get back dollars. What are they going to swap 8 trillion dollars into? And an even better question how?
$8 trillion is about half the M3 of the Euro.
In fact there are only about 20 trillion dollars right now, there isn’t even enough liquidity to cash out.
For one, they can stop feeding Microsoft and other American conglomerates and develop Free Software alternatives.
Ok, but that doesn’t answer the question how do you cash out on $8 trillion dollars and convert them into another currency.
India and China are buying gold: https://www.msn.com/en-us/money/markets/india-and-china-move.... Good time to be a gold bug.
There's literally not enough gold in the world to make a difference at those scales. And while gold can serve as a (relatively) safe store of value, ultimately investors need to earn returns and holding gold has negative cash flow.
You sell into the market and buy a replacement asset. Easy peasy. No need to sell all at once, you simply change your strategy to invest new capital elsewhere and slowly roll off existing debt ownership.
Over time, the US will need to find someone willing to buy new US debt as existing buyers and holders invest elsewhere.
You definitely cannot do it all at once, all you can do is what China and India are doing, which is to slowly sell US treasuries over many years. China used to hold $1.3T of US treasuries but they now only hold just under $0.7T, thus about half has been sold. India similarly has reduced their holdings from $240B to $190 over the last year. It can be done, just not quickly.
Stocks generally survive currency devaluations, but treasuries do not. So I am not a fan of treasuries in this environment, but US stocks should be fairly resistant except for their dependency on the US economy, which could be disrupted in a currency devaluation.
Both of them are doing it under pressure from the US to reduce how much debt they owe.
Many of these securities do not have a secondary market that isn’t in the US. Push comes to shove the US can block a lot of these trades.
> Push comes to shove the US can block a lot of these trades.
If you really want to see a re-run of 1929 that would be the way to get it.
> Both of them are doing it under pressure from the US to reduce how much debt they owe
Citation please?
> What are they going to swap 8 trillion dollars into?
For African raw materials, Chinese commodities and components, etc - like everybody else with lots of $$. If you're paying attention, that also means higher inflation in the US.
Thanks, GOP geniuses... of course the rich, of which the admin is full of, love inflation because it makes them richer. If you complain about something, they'd blame China and Maduro, mission accomplished!
Those are thin markets, and not necessarily even open to most EU investors. Also, good luck getting your investment back when there's another coup or civil war in the target country.
Major investors have always had some level of international diversification and that will continue. But this recent EU move won't have any significant impact.
> Those are thin markets, and not necessarily even open to most EU investors... coup or civil war in the target country.
I didn't say anything about "investing" in any closed markets or target countries. This isn't complicated but I'm sensing some entrenched and overly optimistic preconceptions getting in the way.
It becomes complicated pretty quickly if you're trying to deploy large amounts of capital into small, unsophisticated markets regardless of whether you label it "investing" or something else. But you seem to be confused about how this stuff works in the real world.
This is talk about not investing more in the US though, is it not? Why it the top discussion so misconstrued about what is being said/reality? €300B <> $8T, yet somehow that is the discussion?
Counter argument: people invest in bonds. Quite a lot of bonds in fact.
Picking up pennies in front of a steam roller and counterparty risk seem to be perennial favorites of youth, but I hazard to guess only a minority in the market have flesh yet untouched by fire.
Unfortunately the US Dollar is devaluing. In the past year the dollar went down by 11%. That means SP 500 which has gone up 13% in the past year has only gone up 2% for a European.
The fact that the EUR/U$S parity did not change much means EUR devaluated about the same, doesn’t it?
No the $ devalued against the euro by about 11% in the past 12 months. Look at a chart.
EUR/USD increased ~13% in the past year
https://www.xe.com/currencycharts/?from=EUR&to=USD&view=1Y
False. Dollar has crashed against Euro.
The DXY dollar index:
https://www.cnbc.com/quotes/.DXY?qsearchterm=dollar%20index
The big move down happened March-June.
Coincides with major tariff actions by the admin
This means that from a European point of view, US investments are 11% cheaper.
This could be attractive depending on your view of the future of the US dollar and US stock market.
Well no thanks, the US is going the same path Hungary and Turkey, just with a 10 year difference, autocrats are never good for business.
As soon as Trump came in power I sold all my dollars and I was wise to do it.
Expect things to go much more worse from here, this is only the beginning. For now the FED has relatively been untouched, it's not going to stay pristine forever.
yup, by going after Powell he is threatening the rest of them to vote the way he wants in the future.
While it would be great if people of the US started to show some backbone and resist this fascist takeower, I'm quite pessimistic. What's going on makes me really sad.
OTOH it's not too late!! We have seen trends like this turned around before.
The so-called “fascist takeover” is resisting you.
It's a matter of perspective, for the US administration, that 11% drop is reason for celebration.
Their goal is to make American blue collar manufacturing jobs viable again, and part of the plan is to make it cheaper for other countries to buy their goods.
It's not the first time the dollar has been intentionally devalued.
> Their goal is to make American blue collar manufacturing jobs viable again,
It's one of many stated reasons.
What the real reasons are is not really important IMO. But my money would be on something much more sinister and selfish
Not if the European invested in currency hedged vanguard sp500s
No idea what this number actually is. If it includes pension funds' investments in the US stock market and US bonds, then it is underestimated.
Similar thing to what the UK did post-Brexit?
> investors will continue to send their capital wherever it can earn the highest returns
Maybe. But they're allowed to avoid junk bonds and other "risky investments".
Yes, but also no.
Pension funds around these parts are big, we are often forced to pay into them. Years ago, I noticed they started advertising green funds. Would not be surprised to see options that exclude the US too.
If you look at Trumps polls across EU countries, it is heavily in the negative and a lot of us are wanting to put our money where our mouth is about it.
> Pension funds around these parts are big
Not really. Most EU countries don’t even have noticeable state pension funds (and one of the biggest culprits is actually France). They just rely on younger people to support the pensions of the retired ones.
You're forgetting about private pension funds. Those are massive, and often mandated by a collective bargaining agreement.
Not in France they aren’t. And not in most EU countries that still rely in pay as you go pension systems.
For comparison. France’s pension funds (total public and private) are 12% of their GDP. Total EU pension funds are also around 20% of total EU GDP. USA pension funds are 170% of their GDP!!!
It's not either-or, necessarily.
Yes, we have a pays-as-you-go pension system in Denmark (sigh). But regulations were also changed a while back such that employees must pay into a pension scheme of their own. In our case, that's handled via your employer and there's a minimum contribution limit and often incentives to pay a higher level.
((not my area of expertise))
> Profitable investment opportunities in the EU remain slim
Is this investment advice?
Yes. You should only invest in profitable opportunities.
This is presented axiomatically but it's trivially proven false.
If American workers can properly organize general strikes then those investments look much less appealing.
TIL EU savings rate is far more than US. 18.79% vs 3.50%
Guessing that's somehow counting enforced deductions off paycheques. Would be a wild difference if not.
https://tradingeconomics.com/european-union/personal-savings
https://tradingeconomics.com/united-states/personal-savings
This doesn't surprise me at all as an European. My mind struggles to understand how so many Americans live paycheck to paycheck.
that's true to some extent, but at this point it's mostly a meme (at least the 60% number was)
> In 2023, 54 percent of adults said they had set aside money for three months of expenses in an emergency savings or “rainy day” fund—unchanged from 2022 but down from a high of 59 percent of adults in 2021.
https://www.federalreserve.gov/publications/files/2023-repor...
via
https://www.noahpinion.blog/p/paycheck-to-paycheck-and-five-...
That’s way higher than I’d have guessed. Maybe there is some sort of bimodal distribution happening there. Half the pop is flat broke the other has multiple months of buffer
There's no "enforced savings" that I know of in Europe.
3.50% in the US sounds extremely low to me. It has fallen a bit recently but the savings rate was about 25% in France in 2020. Common knowledge says to strive to save at the very least 10% of one's revenue around here.
According to some sources, 1 in 4 Americans don't/can't save at all.
https://edition.cnn.com/2025/11/13/economy/job-prices-debt-e...
There is a very large and growing portion of the US that maintains no savings at all. In fact it's the opposite and many are slowly spending their way into perpetual credit card debt.
It's essential to the way the system works. One person's money is another person's debt. Normally the government would take on enough debt to ensure everyone had money, but the USA is a weird case.
Money and debt are just mechanisms to allocate resources. The government can print infinite money like Zimbabwe and it wouldn’t matter if there aren’t enough resources to allocate.
It seems like savings include pension ([1], but it is a bit unclear to me) , and that is a kind of forced saving (as in many places in Europe you can't choose to not get pension and get it as cash to spend instead).
1: https://ec.europa.eu/eurostat/statistics-explained/index.php...
Sounds like they don’t count that. They seem to only count disposable income and payments the company does to your retirement aren’t really disposable
It's not clear to me either, but as I understand it it doesn't include pensions because social contributions are not part of "disposable income".
I think that "the net adjustment for change in pension entitlements" is there to take into account the expected reduced future income from pension entitlements dwindling over time (edit: in effect, making pensions count as negative savings) somehow, but it's unclear.
I looked for another perspective but the French national bank doesn't mention pensions in its explanations[0].
[0] https://www.banque-france.fr/system/files/2024-08/epargne-de...
The UK has "enforced savings" in the form of auto-enrollment pensions for over 10 years. Looks like Ireland is just starting to do it too.
That's mostly to prepare teenagers at the time for having no state pension in 50 years.
I have about seven of the buggers and I'm only in my mid 30s.....
Pensions or teenagers?
Even the poorest EU countries are actually surprisingly wealthy.
Bulgaria was switching to Euro on the new year’s eve and the easiest way to convert Leva to Euro was to put the money into the bank, so Bulgarian deposits reached 100B+ levas into personal accounts by November which converts to ~50B+ Euros. Which is over 10K Euros per Bulgarian adult. Not bad for the poorest country, considering that home ownership rate is also very high(%86 IIRC).
The life is pretty good for a GDP per capita of $18K.
Those numbers are quite off. The total amount of Leva in circulation at the end of 2024 was round 30B. End of November 2025 in circulation around 23B.
Here’s a source: https://sofiaglobe.com/2025/12/23/on-the-eve-of-the-euro-zon...
By the mid January %58 of the leva were removed from circulation BTW.
Total deposits in the bank accounts sure. I understood it as they deposited 100B of their cash into their bank accounts by November.
fair, edited for clarification
Home ownership can be a deceptive stat in Eastern Europe - many people don't register their address at the place they rent - in part because they're renting it under the table.
Tons of folks also live with their parents into their 30s.
The Spanish taxman announced this week they will consider a taxable gift when adults live at their parents home. Anything to keep the juicy inflation-adjusted pensions and their votes.
When people talk about EU home ownership, savings, etc. they often neglect to mention the skew of the Boomer class. It really sucks for young people.
The US can always print more money to fund its institutions, but other countries have to save theirs. Sure, they can print more euro but when so much stuff they need is traded in USD, that's not nearly as effective as when the US prints more USD.
> The US can always print more money to fund its institutions, but other countries have to save theirs.
That only works if there are takers for US bonds otherwise all this will do is devalue the USD.
That's the US's exorbitant privilege which no other country has.
In the US people take on personal debt for something like a car. In the Netherlands (where I live) this is very uncommon: people save up, then buy it.
Our public transportation infrastructure is so badly managed that many jobs will ask you if you have reliable transportation and fire you if you find yourself without it. If your car breaks here it's often not really a option to save up for a bit first.
Part of "freedom", yes?
Also helps that most people don't start with an extremely large student loan when they have finished their education.
It helps that Europeans can go to a hospital or take an ambulance without having to open a GoFundMe account.
You would think the chance of this happening would increase the saving rate, no?
Retirement accounts are more like social security than 401k. There’s no set amount of euros set aside for me it’s all in the pool paying for older peoples retirement
And yet there's no lack of demand for US investments, because they're attractive to foreign investors. (This is the flip side of trade deficits.)
I wonder how much of EU savings is invested in foreign countries?
The Europeans I know seem to save in actual bank savings accounts, whereas the Americans I know seem to invest their money. Maybe I'm not looking hard enough, but I can't find a description of "savings" on those charts, so I think it might be ignoring American investments. To me, they are both types of investment, one a super safe option with a low return, and the other a more risky option with a higher return.
From that Draghi paper a year ago or so, I believe part of Europe's innovation problem seems to stem from a lack of private investment by individuals in this way, so that would also align with this different philosophy on dealing with savings.
When private individuals have their money in savings accounts, aren't the banks investing that money anyway ?
Practically, yes. But in economics they often classify “savings” only as being in a bank account. So if you “save” money in a 401k, where it’s invested in stocks, bonds or ETFs or whatever, then it’s not recorded as savings because they consider that “investment”. So when someone says EU saving is 18.79% vs US saving of 3.50%, most of the wealth saved by Americans isn’t showing up in that comparison because it’s not in a bank account.
If it is just a matter of classification, then why would part of the problem lie on lack of private investment, when private savings are invested by the banks themselves ?
I think a big a part is that a lot of EU money is invested in the US instead, and I am looking forward for that to stop..
There’s a whole lot of regulation around the types of investment a bank can make with the money. Most of it has to be low risk mortgages, loans and high quality bonds.
Makes sense, thanks !
Isn't it a huge issue for Europe, that stock revenue is heavily taxed, while pensions accounts (which make the same investments) are not?
Which means it makes more financial sense to put the money into pensions accounts?
I’d be very surprised if that site wasn’t counting stocks as savings.
I'd argue accumulating too much wealth compared to your salary can be a bad thing - for example, real estate compared to salary is even more expensive in Europe than the US - so the extra money doesn't go anywhere useful, you just get to pay more for the same stuff.
Also, if the US person pays less taxes, but has to pay for a bunch of services that the EU person would get for free, that means the US person has a lower savings rate, even though they're paying for the exact same stuff.
it's true, lot of money is sitting in safe assets in banks
https://www.ecb.europa.eu/press/inter/date/2024/html/ecb.in2...
see also https://archive.md/xaiLU
"Europe’s AI ambitions are running into a markets plumbing problem
The region lacks the depth of long-dated investment capital needed to fund required energy infrastructure"
If like me you are wondering why the sunglasses, it looks like he is using that to mask an eye infection.
https://www.independent.co.uk/news/world/europe/france-emman...
Probably just a broken blood vessel in the eye.
There once was a lady in France,
Whose right fist struck as if by chance;
“Just an eye infection, come on!”
Is this a really bad attempt at a Limerick or some other form I'm not familiar with?
Not sure why this was downvoted, his people literally just confirmed this.
Related:
> Savings and investments union
https://finance.ec.europa.eu/regulation-and-supervision/savi...
Please update the link to https://streamable.com/m4dejv or the transcript of the entire speech https://www.weforum.org/stories/2026/01/davos-2026-special-a...
The EU can’t even get a Mercosur deal closed after 30 years. I think this will probably happen in another 60 years.
What makes it more ridiculous, is that fact that we from the EU are shouting US is getting isolated, but some of the biggest economies in the world do not want to trade with 4 countries from the 3rd world, because we think will get bankrupt because of that.
It's because of agriculture and us here in Europe losing our food-related resilience because of that. The tertiary sector won't save you in case of a continental blockade and the Argentinian/Brazilian grain suddenly becoming unavailable. "We'll go back to our farmers here in Europe!" Oops, you've just pushed them into bankruptcy a few years ago as a result of Mercosur, so good luck with that.
What happens to bankrupt farms? Are they converted into national forests?
Probably real estate. You also lose the tools, and the people, and the know-how.
Well that doesn’t seem to matter in another areas of the economy… meanwhile in Germany we are experiencing an historical de-industrialization. I don’t see nearly as much fuss about that.
Severely downsizing or shutting down the military production, how has it been working to get it running again so far? And now imagine if Germany wouldn't have the luxury of hiding behind the Ukrainian/American/Polish/Finnish backs and would have to actually fight the war at the same time.
Well, returning the food production while the population is starving would have been an even harder problem.
The amount of erosion and heavy use of fertilizer doesn’t seem so good in the long run.
Are you talking about Argentina or France?
Wait... did I change thread or what... wasn't the discussion about EU / Mercosur? Why do you pick these 2 countries?
*We = farmers, their lobby, and their simps.
I'm sure everyone would be happy to purchase stuff that respect our own standards. We forbid our farmers to use some chemicals because they are bad for health and nature, it would be completely stupid to start purchasing food abroad that is made using those chemicals, don't you agree?
Sorry, the standards imposed to meat from south america is way higher than the European. Wine is nearly impossible. And spicies like paprika also require higher standards than in Europe. I don’t know what you mean with that. Free trade does not mean there are no standards to met. Same standards will be imposed (as are already imposed) to anything imported in the EU. Also in south America, because of size you don’t need nearly as much chemicals as in EU anyway.
Last but not least, that of quality standards and chemicals doesn’t hold anyway, as there are already loads of products coming from those countries already… I look always where things come from, and fruits come up to 80% from South America (including Mercosur). Dang even apples from Argentina in Germany, which is frankly non sense to me! It’s just not about quality, is good all protectionism and imposing tariffs, just as Trump is doing, but if we do, is ok.
Yes, I agree with the standards, but has absolutely nothing to do whatsoever with the agreement Mercosur/EU. The standard will be imposed for ANY product sold in the EU, doesn't matter where it comes from, as it should be.
Do you have sources for what you say for meat for example? From what I could read on this topic, they don't have the same traceability constraints, may use growth hormones that are forbidden here, etc.
To add to the absurdity, one of the thing we Europeans will be able to export more to SA is chemicals, including those which we forbid here because they damage health and environment...
Ask the owners of this shop:
https://www.mate-tee.de/en/
Or people exporting meat I happen to know. Independent of all requirements for anything in the EU, that of course has to be met, they will ask for lots of things above and beyond. That is the reality of the market. If you want to play with such a big market, it won’t be easy.
I know a guy who had paprika plantation, wanted to sell to Germany. They asked conserved samples of the last 20 years to guarantee consistency. That is just not normal.
Ah yes ok, that some high quality importers are careful and asking higher standards I totally believe it, and can easily understand that they might ask even more guarantees than from the farm next to them.
But there are always buyers for the cheapest products too.
> but some of the biggest economies in the world do not want to trade with 4 countries from the 3rd world,
It's this attitude that makes non-Europeans (especially those of us without European heritage) less sympathetic to European pleas of support, yet it's your politicians that try to sign a defense pacts with "third world countries" like India [0]
[0] - https://www.reuters.com/world/india/eu-proceed-security-defe...
You should understand what the term "third-world" means. It is not the synonym for a "developing country", let alone "shithole country".
You and I both know in what context they used that statement. Enjoy getting offshored.
Offence is taken, not given. I think it's an overreaction trying to find something to get offended about, instead of seeing the essence of what the parent was trying to clumsily say.
I thought Americans today are pro-tariffs and against free trade? US is still unable to get a free trade deal with mercosur.
OP isn't American.
It's hard to overstate how much a beating the EU's reputation took after the Mercosur fiasco.
Lula took a massive political risk to push the EU-Mercosur FTA despite the power behind the throne in Brazil being wooed/bribed by the Trump admin [0] and already on the fence about the EU-Mercosur FTA because they are Ag Barons that primarily trade with the US and China [1] AND during a hotly contested election year.
This only makes the EU look like a less attractive negotiating partner, and incentivizes countries to unilaterally negotiate with individual EU states instead of the EU as a whole, thus undermining the entire EU.
If the EU alienates China, the US, Russia, Brazil, India, ASEAN, Japan, Korea, etc who else is left?
That is the whole crux of Carney and Zelenskyy's speeches at Davos.
> US is still unable to get a free trade deal with mercosur
Instead, we get an REE extraction deal in Brazil [2], financial backing for our current Venezuela escapade [0], and a president exporting Hispanic American-style far right politics into EU member states like Spain [3] and Italy [4] where right-leaning South Americans have become a major political voting bloc.
The more isolated the EU becomes, the easier it is for countries to begin taking advantage of European nations on their terms.
Edit:
The EU is now unfreezing and ratifying the US-EU trade deal [5]
[0] - https://www.bloomberg.com/news/articles/2026-01-18/brazil-s-...
[1] - https://www.ft.com/content/d293237e-e39f-4f4c-89e7-4c52cf937...
[2] - https://www.ft.com/content/401a9e84-3034-4375-bf39-56b92500c...
[3] - https://www.reuters.com/world/europe/spains-far-right-vox-ho...
[4] - https://cebri.org/revista/en/artigo/172/javier-milei-and-the...
[5] - https://www.bloomberg.com/news/articles/2026-01-22/eu-plans-...
Why link to some reddit thread? I watched the video, and he described divestment from US bonds and equities. Those are easily some of the most desired, and consequently overvalued, securities on the planet. If European divestment actually exerts downward price pressure, that would mean ordinary Americans investing for retirement would be able to buy them up cheaper. Is that a bad thing? Also, it would mean Europeans would be less able to reap the benefit these corporations' profits and growth.
Can someone explain what he is actually suggesting? What $300B he is talking about, and on what it will be invested in instead.
Also why is he wearing sunglasses?
I think $300B is about everything. Pension funds, investment, military spending etc.
The glasses are due to eye redness.
https://streamable.com/m4dejv
So, how is this going to work? Is he talking about the French Ministry of Economics and Finance? About the Banque de France? About the the ECB? Afaik the last two are, nominally at least, independent, while Macron is just a politician representing one of the 27 EU countries, so what authority does he have? What do the political leaders of Latvia think about this? Or of Malta?
So no more MSCI World in Europe?
Individual investors can buy whatever they want. The idea is to be competitive with the US, so that indices like MSCI World are more than just thinly-veiled S&P500 indices.
Love that MEGA acronym someone dropped in the comments. I need a blue hat with a golden MEGA lettering embroided.
Foor shure
For those unaware of the context, there's a banger tweet: https://x.com/neilzegh/status/2013679440362975315
Have you tried Reddit?
Funny that of all people, Macron says that. Just a few months back, France government bonds lost their AAA rating because Macron refuses to pass legislative reforms. All while the EU biggest powerhouse economy - Germany - has remained stagnant or is even shrinking. Good luck convincing investors to not buy US bonds with that outlook.
So, the president of a socialist country (a country where the government spenditure is 57% of the total GDP is a socialist country [1]) is now saying their citizens that they will be stopped from investing the little money the state allows them to keep wherever they want, and be forced to invest in their faulty economy.
That’s it, right?
There’s a reason Europeans mostly invest in US stocks: they are much more profitable because the US doesn’t tax to death and regulates to death their own companies. Maybe France and the rest of the EU should try the same.
[1] https://www.insee.fr/fr/statistiques/2381414
When will the EU understand that they have the GOAT Paul Graham across the channel in the UK?
Open YCombinator Paris or London: Capital would flow to him.
drop capital gains tax on EU stonks and watch the flight. there are a million ways they could make this attractive
> drop capital gains tax on EU stonks
Right, because it's not like France already has a large primary deficit or anything.
If you are rich enough, it isn’t rocket science to avoid capital gains taxes in the EU. And by rich enough, just a few hundred K. (See the related FIRE Reddit boards)
confused sounds in voiced glottal fricative What capital gains tax?
In general those things work pretty bad. Then someone will just make an EU company that owns US shares to do a tax arbitrage.
PG is obsolete.