Europe and the U.S.
It’s a bird! It’s a plane! It’s super budgeters!
If you can’t solve your own debt crisis, don’t you think it’s silly to try and solve someone else’s debt problems? According to the Wall Street Journal, “The Obama administration dispatched one of its top economic officials to Europe on Tuesday to press officials in Greece, Spain, France and Germany to calm a widening crisis that threatens to spark new trouble for the U.S. economy.”
It seems this week, that speculation on Greece’s fiscal crisis would continue to spread and have lasting implications for other Euro Zone countries. What is Washington worried about? That the crisis could put a run on Greek, Portugal, Spanish, and Italian banks. Quite frankly, the boulder is starting to roll that direction.
Unfortunately, world eyes are fixed on Spain, as talks of bailout are whispered throughout Europe. The country’s economy is slowing, retail sales and exports are below par, and Spain central bank leader resigned early, leaving many questioning Spain’s future. Notably, Spain’s credit rating was downgraded to junk this week, sending the Euro plummeting to a new, two-year low.
We know Spanish banks are exposed to Greece’s debt crisis, but many are still unsure whether or not Greece will choose to meet the conditions of its latest bailout, work out a new deal, or exit the Euro Zone (or countries that share the Euro). At this point, it’s any person’s guess what will occur going forward.
The problem, however, is thus far, leaders in Washington have been unable to subdue its own fiscal crisis, which threatens a struggling economy. No one really knows the impact a Greek exit or bank run would actually have on the U.S., but one thing is clear: the U.S. debt crisis is not improving and a frozen economic crisis could make matters worse.