Podcast Summary: More or Less

Episode: Could Europe use its financial muscle to strong-arm the US?
Air date: January 31, 2026
Host: Tim Harford (BBC Radio 4)
Guest: Toby Nangle (Financial Times)

Overview

In this episode, Tim Harford examines a provocative question sparked by a geopolitical flare-up: Could Europe use its financial holdings in the US to exert influence over American policy—specifically, in the wake of President Trump’s move to consider taking over Greenland? The discussion debunks and clarifies the numbers often cited regarding European ownership of US financial assets and explores whether those assets could really serve as economic leverage.

Key Discussion Points and Insights

Background and Context (01:18–02:38)

• Recent Events:
  President Donald Trump’s consideration of annexing Greenland created anxiety in Europe, leading to questions about non-military means of deterrence.
• The Financial Leverage Theory:
  Some suggested Europe could threaten the US by selling off vast amounts of American financial assets, a move purported to inflict economic pain and potentially force a policy change.

Quantifying European Holdings (02:54–05:52)

• What’s Actually Held? (03:10)
  Toby Nangle: "We're looking pretty narrowly at bonds and stocks... people who own Microsoft shares or lending money to companies or to the American government, that's all going to be included."
• Headline Figure:
  Around $12.6 trillion of US financial assets (stocks and bonds) are "held" by European NATO countries.
• Market Share Comparison:
  • Total US shares: ~$70 trillion
  • US government bonds: ~$30 trillion
  • Europe holds roughly 10% of these combined totals.

Who Actually Owns the Assets? (04:49–05:54)

• Held vs. Owned:
  • Assets are often held in Europe via private individuals, companies, or custodians, rather than by European governments.
  • Some assets ascribed to Europe may actually be owned by other nations (e.g., Chinese government investments routed through Luxembourg or Belgium).
  • Toby Nangle: "So that 12.6 trillion has got a lot of noise in it... Deutsche Bank estimate that maybe when we strip out things like the Chinese government's ownership... everything drops down to around about $8 trillion." (05:24)

Could “Europe” Sell Off These Assets? (06:00–08:01)

• Direct Control is Limited:
  Only a small fraction is owned by European governments (notably, Norway’s sovereign wealth fund). The overwhelming majority is held by private institutions.
  • Toby Nangle: "...Apart from the Norwegian government in their big oil fund, they've got a chunk. Apart from that, there aren't huge ownership positions directly from government to government." (07:50)
• Logistical and Economic Challenges:
  Forcing a coordinated European sell-off would be a “logistical nightmare” (08:01).
• Self-Inflicted Harm:
  A sell-off would reduce the value of European pension funds and negatively impact European investors.

Wider Financial Fallout (08:37–09:17)

• Contagion Risk:
  Dumping US bonds would also drive down bond prices globally, increasing borrowing costs for households, companies, and foreign governments.
  • Toby Nangle: “So one consequence of US bond prices falling is that actually that tends to push other bond prices around the world... interest costs for governments around the world and also for households, for companies, they could also be pushed up by any real sell off in the US bond market.” (08:37)
  • Interviewer 2: "So Europe tries to give the US administration a bloody nose and suddenly we're all paying more for our mortgages and for our credit cards." (09:08)
  • Toby Nangle: "That's right. I guess we'd be headbutting them and both coming out pretty bloody." (09:17)

Interdependence or Vulnerability? (09:21–09:59)

• A Paradoxical Situation:
  The US is unique in the scale of assets held by foreigners— does this make it vulnerable, or simply show financial interdependence?
  • Toby Nangle: "I think that it's probably best to talk about it as a statement of fact. It's about the degree of integration there is, how much our fates are bound together financially." (09:37)
  • Interviewer 2: "But the interdependence is real. Despite the fact that both sides of the transatlantic relationship seem to be feeling rather uneasy about this interdependence, it's not a thing that's easily going to go away." (09:45)
  • Toby Nangle: "I completely agree with that." (09:57)

Notable Quotes and Memorable Moments

• On the Scale of Assets:
  Toby Nangle (05:24): “So that 12.6 trillion has got a lot of noise in it... Deutsche Bank estimate that... everything drops down to around about $8 trillion.”
• On Financial Interdependence:
  Toby Nangle (09:37): “It’s about the degree of integration there is, how much our fates are bound together financially.”
• On Mutual Harm:
  Toby Nangle (09:17): “I guess we’d be headbutting them and both coming out pretty bloody.”

Timestamps for Important Segments

• 01:18 — Episode theme: European financial leverage over the US
• 04:00–05:54 — How much US financial assets are genuinely controlled by Europe?
• 06:00–08:01 — Feasibility and logistics of a European sell-off
• 08:37–09:17 — Global financial consequences of mass US asset sales
• 09:21–09:59 — The interdependence paradox, financial ties between the US and Europe

Conclusion

The episode debunks the popular belief that European countries could easily “strong-arm” the US by dumping financial assets. While the raw numbers are impressive, most US assets in Europe are privately owned, not government-controlled. Any forced sale would carry immense self-inflicted costs and ripple through global markets—making financial strong-arming an impractical tool. Ultimately, the story is less about power plays and more about how deeply entwined global financial systems have become.

For feedback or questions, listeners are invited to contact the show at moreorlessbc.co.uk.