Today Europe, particularly Western Europe, finds itself adrift, an aging continent slowly losing economic, military and diplomatic clout.
• The continent’s economies have been largely stagnant for about 15 years, likely the longest such streak since the Industrial Revolution, according to calculations by Deutsche Bank. Germany’s economy is 1% bigger than it was at the end of 2017, while the U.S. economy has grown 19%.
• Europe’s share of global economic output, measured in current dollars, fell from roughly 33% to 23% between 2005 and 2024, according to World Bank data.
• The long stretch of weak European growth has opened up a big gap in incomes between the U.S. and Europe. European household wealth has grown by a third as much as Americans’ since 2009. Per capita GDP in the U.S. is now $86,000 a year, versus $56,000 for Germany and $53,000 for the U.K.
• In the absence of economic growth, Europe’s welfare states, which account for half the planet’s welfare spending, will come under growing strain from aging populations. The average European is nearly 45 years old, compared with 39 for the average American, and the continent’s working-age population is predicted to fall by nearly 50 million by 2050, leaving fewer workers to pay for more retirees.
“Europe needs to wake up, or it’s dead in so many ways,” says Tracy Blackwell, the retiring CEO of Pension Insurance Corporation, a U.K. asset manager.
Or as JP Morgan chief Jamie Dimon said at a recent speech in Dublin, “You’re losing.”
Said British historian Niall Ferguson in March: “What was the status quo? The Americans provide our security, the Russians provide our energy, and the Chinese provide our export market. Guess what? It’s all gone,”
As Italy’s prime minister Giorgia Meloni puts it, “America innovates, China imitates, Europe regulates.”
Bad luck and bad policy
In the past 15 years, a key engine of European growth—manufactured exports—has been hobbled by events beyond its control, including U.S.-led trade wars, China’s mercantilist policies and Russia’s invasion of Ukraine, which sent European energy prices skyrocketing.
• In Germany, industrial electricity costs three times as much as in the U.S.; in the U.K., four times as much.
• Ten years ago, four European companies ranked in the global top 10 by revenues. Today, the continent’s biggest company by market value, German software firm SAP, ranks 28th.
• America’s share of global stock market valuations has held steady at 48% since 2000, but the EU’s has fallen from 18% to 10%, and the U.K.’s from 8.3% to 2.6%, according to Deutsche Bank.
Europe’s economic slide has been accompanied by shriveling military prowess. Though European leaders are now vowing to take defense more seriously in the face of a revanchist Russia, they are struggling to build up their forces. Britain’s entire army can fit comfortably inside Wembley Stadium.
Mario Draghi, a former top European central banker, proposed a series of steps in a landmark EU report last year. But the proposals immediately ran into resistance. “You say no to public debt, you say no to the single market, you say no to creating the capital market union. You can’t say no to everything,” a clearly frustrated Draghi said in a speech to European lawmakers in February. “So when you ask me, ‘What is best to do now?’ I say, ‘I have no idea. But do something!’”

Without more economic growth, European governments will have to choose between ever-higher taxes and massive cuts to welfare. That is because an aging population means much higher healthcare and pension costs, paid for by a working-age population projected to shrink by some 2 million a year on average through 2050, according to the Bruegel think tank in Brussels.
Meanwhile, the current strategy of financing welfare spending with taxes and debt is running out of road. Tax revenue as a share of economic output is already around 38% in Germany, 43% in Italy and 44% in France, compared with 25% in the U.S., according to OECD data. The U.K.’s annual debt interest bill stands at nearly $150 billion, twice as much as defense. Borrowing costs have already risen in the U.K. as debt approaches 100% of yearly economic output.
There are exceptions. Sweden has quietly spurred economic growth by cutting back its welfare state—tightening government spending, revamping the pension system and slashing corporate and personal tax rates. Per capita incomes are now climbing, and the country has seen a burst of entrepreneurship.
But in most of Europe, such reforms are proving to be a big ask. Europeans consistently vote for politicians who protect the status quo and expand the welfare state. In France, which hasn’t balanced its national budget in more than 50 years, government spending is around 57% of GDP, compared with 36% for the U.S.
Appeared in the August 23, 2025, print edition as 'Europe Is Losing Can Europe Reverse Its Long Slide?'.

Mentioned above is a global bond fund. DINDX is a Morgan Stanley Global Fixed Income Opportunity Fund with a long track record. It is classified as multi sector bond.
In November this mutual fund will be converted to an Eaton Vance ETF. Hopefully with a lower expense ratio. Over the years have had good success with Eaton Vance and Morgan Stanley bond funds.

the number of people reporting to work in the private sector in California decreased by 3.1% — a downturn only recently matched by the period when people stayed home from work during the COVID-19 lockdown.
... a ripple effect – the state’s economy is likely to contract later this year due to fallout from global tariffs and immigration raids in Los Angeles and other cities that have rattled key sectors, including construction, hospitality, and agriculture, according to a UCLA Anderson forecast.
Mass arrests, detentions and deportations in California could slash $275 billion from the state’s economy and eliminate $23 billion in annual tax revenue. The loss of immigrant workers, undocumented and those losing lawful status under the Trump administration, would delay projects (including rebuilding Los Angeles after the wildfires), reduce food supply, and drive up costs. Undocumented immigrants contributed $8.5 billion in state and local taxes in 2022 — a number that would rise to $10.3 billion if these taxpayers could apply to work lawfully.

Here's a BrandywineGlobal paper from 1½ years ago discussing convexity and securitized debt, along with market conditions at the time and risks involved in four types of securitized debt.
Riding the Convexity Wave in Securitized Credit

Risks: If the job market worsens significantly along with a hard landing, subprime auto ABS bond defaults may increase sharply. However, we believe the potential credit losses should be absorbed by the cushion provided by credit enhancements and the fast deleveraging of the deal structure.

Just be aware with securitized (MBS) funds.....SYFFX lost -31% in 1Q 2020, as many of these funds were crushed at the time. That's why I don't hold more HOSIX.
It's not that history will repeat, but it can.