Why Europe - and the United States - stand at the Edge of the Precipice

Europe is more than a stone´s throw from Mexico, but the fact is we live in a world wide economy. Some experts say the European Union - and its mercurial currency, the Euro - may not survive. That would have consequences for everybody.

It all has to do with debt vs. GDP (Gross Domestic Product), or debt vs. PIB (Producto Interno Bruto) if you´re in the Latin world. When the ratio approaches 100% - just about where it is in the United States today - the economic engine seizes up, growth slows dramatically and liquidity evaporates quickly. That´s why Apple Inc. (the maker of the iPod, etc.) has more cash on hand than the U.S. government does on any given day. Read the brutal details here.

Sept. 19, 2011: Standard & Poor's today cut Italy's long-term credit rating by one notch, just as it did to the United States on August 5. S&P said that the financial outlook for Italy was "negative".

Sept. 20, 2011: This just published article by an international political economist confirms the impossibility of maintaining (over the long term) an economy with a 90% or above debt to GDP ratio such as the United States has today. Many, many experts have already told us this, but the politicians refuse to heed their warnings. The author warns that not only can the U.S. never repay its public debt, eventually it won´t even be able to service it - that is, pay the interest on it.