Is the Greece-driven crisis in Europe just a topic for economists and
Europhiles, or should ordinary Americans be worried? Business
commentators have given plenty of reasons for Americans to fret. They argue that European instability could have a big impact on the U.S. economy, with drawbacks including a tougher
climate for exports, a weakened recovery, and the possibility of
contagion. Some people, however, have noted some positive effects of lowered
borrowing rates and a higher dollar.
- 'Could Keep US Borrowing Costs Down,' notes 24/7 Wall St.'s Douglas McIntyre.
Though many had worried "America would have to pay higher and higher
rates to bring in new money," which it desperately needs, in fact costs
are currently going down. As investors lose faith in Europe, "for the
time being ... the world views American Treasuries as a safe place to
put capital, and that could keep US borrowing costs down just when the
country is involved in its most aggressive fund-raising ever." Though
the U.S. could be hurt by the European instability in other ways, this
much, at least, is a plus.
- Not 'Yet Flashing Red' Bob Davis and Mark Gongloff
provide some analysis at The Wall Street Journal. Most ways for the
Greek crisis to jump to the U.S. "would require Greece's problems to
jump first to larger European countries." Once that happens, though,
there are plenty of contagion possibilities: "U.S. banks hold more than
$1 trillion of European debt," while the trade ties are strong as well.
"Even before the Greek crisis, the IMF estimated that the euro zone,
whose economy contracted by 4.1% in 2009 would grow at just 1% this
year. Anything short of that could curb U.S. exports and weaken what is
projected to be an already humdrum recovery." They acknowledge the
potential benefits to European stability as "offsetting that drag on
the U.S. economy."
- Greece Is a Warning Sign Interviewed by Glenn Beck, Harvard economic historian Niall Ferguson
says the takeaway here is that "PIGS are us" (PIGS stands for Portugal,
Italy, Greece, Spain). "In other words, we very quickly could find
ourselves in a similar situation to Greece." We shouldn't get lured
into a false sense of well-being by a temporary dollar rally.
- Even Dollar Rallying Mixed Blessing "As the euro sinks, the long-battered dollar may rally," admits Steve Rosenbush
at Portfolio. But while that's good for some things, it also "makes
life tougher for U.S. exporters by raising the relative price of their
goods." He decides that the financial crisis in Europe is, "on balance
... worse for the Europeans than it is for Americans, so the United
States is a net gainer, assuming that it can keep its own debt problems
under the boiling point."
- U.S. Taxpayers Are Paying for Greece Business Insider's Henry Blodget
points out that, since some of the Greek bailout money is coming from
the IMF, which is funded by many countries, "US taxpayers are providing
~$8 billion of the $145 billion going to kick the Greek can down the
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