Bhatia says that the US runs big deficits because it can't stop European banks from issuing dollar denominated debt which the US must implicitly backstop, even if it's shaky.
I don't understand why this forces the US to backstop. Why not allow the European banks to face a liquidity crisis they've created themselves?
I don't understand why this forces the US to backstop. Why not allow the European banks to face a liquidity crisis they've created themselves?