Greece is a problem for USA!
USA is a rich, big, innovative country which does not get into any financial mess. This is what we were taught in school. Obviously things have changed.
What is the implication of Greece problem for the US?
1. Well first of all the Euro is getting weaker. This looks like good news, but it means that American exports to Europe will be hammered. From 1.5 Euro to the dollar, now it will soon be a dollar for the Euro. This is not good news for the manufacturing part of the US economy.
2. The other big handle that the Fed has is the interest rates: However at 0% interest rates, the only place you can go is up…unless of course Fed charges a penalty for keeping cash – negative interest rates!!
3. The US will not give up its dominance over the world. Nobody gives up his privileges without being forced – ask the Kings of France. So in order to keep its status the US will do anything -like printing notes.
4. The good news is if the dollar is strong, it is good news for out IT companies based in India 🙂
Manish J.
The US has it’s own issues to deal with internally and then of course all the international problems.
Take a look at California, it’s a much bigger problem then Greece. The CDS is rising faster now for California then Greece.
http://dailyreckoning.com/greek-vs-california-cds-prices-twins-or-distant-cousins/
1. Most manufacturing has left the US many years ago. There are Japanese car companies producing locally for the US markets. But many of the major American car makers have moved to Canada and Mexico.
2. Since Americans don’t save it’s no big deal. Just kidding of course, this just forces Americans to spend since keeping it in the bank earns nothing
3. Very true. In all of this financial mess, it amazes me that the US prints all this money and foreign countries buy it up.
4. Very true.