It's one thing to borrow $15,000 for a new car. A percentage point one way or the other is not that big a deal. But if you need to borrow, oh, say, $1.7 TRILLION (which is the amount of U.S. debt some economists believe China holds) then a percentage point is a very lot of money.
Countries buy U.S. debt because it is a safe place to put their money. If you are the Chancellor of the Exchequer of Upper Iguana, you can either keep the nation's money in gold bullion and look at it every day or so; or you can put it to work by buying U.S. Treasury bonds, get paid a decent interest rate, and sleep soundly in the knowledge that the U.S., unlike Greece, is not likely to go B.R.O.K.E.
The members of the European Union are straining under the burdens of all of the social programs which have been instituted over the past few years, plus the burdens of bailing out banks, car companies, and just about anyone else who came crawling to Paris, Berlin, or Brussels.
They don't have a lot of extra cash lying around to bail out Greece much less Portugal, Spain and Italy which may be next on the Oliver Twist "Please, sir, I want more" food line.
The IMF has some extra money, but a great deal of that comes from you and me, and we have already seen that we're not exactly walking around with $100 bills falling out of our national pockets.
What is the answer to all this? Governments - especially the elected legislators - are going to have to admit there is not enough money in the world - literally - to fund every program for every person, in every place, every day.
At some point Members of the U.S. House and Senate are going to have to earn their pay and tell their constituents that the free money window is closed and they are going to go to family members, churches, or local agencies for help because we're out of money.
No one will say this out loud, but the United States is only one failed Treasury auction from being Greece, and there is not enough Windex in the universe to fix that.
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