His concern: the UK is a large buyer of U.S. Treasuries. If Britain itself falls into a serious financial crisis, those purchases could weaken just when America needs them most.
He sees Britain as one of the weakest links in the chain, with France another possible trigger.
And if stress spreads through Europe, that could feed directly back into the U.S. Treasury market.
That’s the part worth watching.
America’s bond problem may not start in America.
@philippilk
Video
Mario Nawfal (@MarioNawfal)🇺🇸🇮🇷🇪🇺 The next Iran escalation could trigger a financial crisis in Europe.
I spoke with economist Philip Pilkington about what another major round of U.S. strikes on Iran could mean for the global economy.
His concern isn’t just oil reaching $120 or $125 a barrel.
It’s what happens when that shock hits countries already struggling with debt, inflation and rising borrowing costs.
Philip believes France could eventually need an ECB bailout, with Britain potentially next. And he fears the fallout could spread into U.S. Treasury markets.
But I challenged him on something.
Foreign holdings of American debt are actually rising, despite China and Japan selling. Doesn’t that suggest investors still trust U.S. Treasuries?
Philip thinks that confidence could disappear quickly if European governments are forced to sell assets to defend their own economies.
He also suspects gold is replacing Treasuries as the ultimate safe haven, although he acknowledged that hasn’t been proven.
What worries me is how little room governments seem to have left for another major shock.
A war that starts in the Gulf could end up testing the financial foundations of Europe and America.
@philippilk
Video
— https://x.com/MarioNawfal/status/2113355150018650394
