General Question

Ltryptophan's avatar

What will two weeks/two months after the collapse of Greece look like for the US?

Asked by Ltryptophan (12091points) May 25th, 2012

So, Greece is due to fail. It’s nearly certain.

This is going to really shake up Europe. Greece is going to be a scary place.

But the dollar, what are the reverberations going to be for the dollar?

Do we need to be stock piling supplies? I’ve seen some (STOCKPILIING), especially of water.

Good luck folks. :(

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9 Answers

zenvelo's avatar

It’s not that Greece is going to “fall”, there economy will continue it’s collapse as it disengages from the Euro. But while it will be a rough summer for the Europeans, in the longer run it will be more healthy for them

And the effect on the US economy is going to be more the result of weakness of the Euro than anything else, so exports to the Eurozone will cool off.

Why would you stockpile supplies? That’s silly for something that has already been significantly discounted by the financial community.

ETpro's avatar

@Ltryptophan Great question. The nonpartisan CBO estimates that our recovery will turn into a double dip recession if Greece defaults on their debt or leaves the EEC. They made it clear we can avoid that by taking the proper steps, but the likelihood of us doing that is slim to none. The Republicans would love to crash the economy just before the 2012 election so they can claim Obama did it.

bolwerk's avatar

Short answer: we don’t have to be screwed, but probably are.

There will probably be another recession if Greece defaults, and who knows how leaving the euro would go? Worst case scenario is they default, leave, print their own money, blah blah, and the banking system is in shambles. Better case other EU powers help them transition to their own currency, smoothly as possible. One problem is, smoothly as possible isn’t very smooth. Whatever happens, holders of Greek euro-denominated securities are going to want to dump those before the new currency starts floating against the euro while holders of euro-denominated securities in every other EU country will want to do likewise to some extent. And things don’t go very well when an entire country’s securities (stocks, bonds, etc.) all get dumped. It probably annoys the Protestants, but the best case for, well, the whole planet is bailing them out and maybe avoiding a recession. What really should be done is a longer-term plan that fixes Greece and finds ways to assure this doesn’t afflict the eurozone again.

And @ETpro is probably right about the Republikans, though perhaps Europeans are at least sharp enough to see that not bailing out Greece could help encourage Obama to lose, which would be awful for economies on both sides of the Atlantic. Well, we’ll see. Sarkozy is gone, but Merkel is somewhat like a Republikan on foreign affairs, but is somewhat more traditional conservative on domestic matters – what that means is, the swarthies in the south of Europe get something more akin to what Americans call conservatism, and Germany gets a more traditional conservatism that preserves a functioning welfare state married to a healthy-ish market economy. Then again, she may not want to be massaged by complete dumbass – this one wearing creepy magic underwear.

flutherother's avatar

The Greek economy isn’t itself very important in global terms but if Greece leaves the Euro zone other Euro economies such as Spain, Italy and Ireland might follow in a kind of domino effect that could lead to a worldwide recession. Good luck with the bottled water, I’ll be drinking something stronger.

elbanditoroso's avatar

I think that it will be a perfect time to travel to Europe – Greece in particular, because the dollar to Euro ratio will be extremely favorable to the dollar.

incendiary_dan's avatar

Probably a bit like the Great Depression, in terms of disruptions of services and supplies. I think it’ll take a few months from the official defaulting for the U.S. to descend to that point. Just make sure you’ve got your essentials taken care of, and learn from people who did better during the ‘30s. Maybe study up on some other economic collapses, like Argentina in 2001 and the Soviet Union. Consider that Cuba and North Korea both had to deal with loss of Soviet support, but Cuba is thriving while North Korea is, well, it’s North Korea.

jerv's avatar

Well, we’re following them on the road to ruin, so whatever they look like, we will look like soon enough, pretty much for the reasons @ETpro cites.

mattbrowne's avatar

Europe will look like the US after Lehman’s went bankrupt. Outside of Europe the situation will be serious too but the euro countries will be affected most. It would be bad, but not catastrophic. Strong economies will be able to handle the situation. Migration of educated young people will accelerate. For the past months thousands of well-educated academics from Greece, Spain and Portugal have been moving to Germany. And we need them. There’s still a shortage of engineers and computer scientists.

ETpro's avatar

@mattbrowne Send any you don’t need over here. :-)

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