The United States’ tepid economic
recovery is being weighed down by the financial crisis in Europe. That
was the message to the Senate Banking Committee last week at a hearing about
what the European debt crisis means for Americans.
Although the movement of the Dow
Jones Industrial Index gets much of the attention as it tips up or down with
each bit of news coming from across the pond – the effect on Americans extends
beyond the price movements of our domestic equities.
“The financial stresses in Europe are undoubtedly spilling
over to the United States by restraining our exports, weighing on business and
consumer confidence, and adding to pressures on U.S. financial markets,” said
Steven Kamin, director of the Division of International Finance at the Federal
Reserve, in front the committee.
The current center of gravity for this mess is Greece. It has been mired in a tumultuous
two-year (and counting) financial saga over worries that it won’t be able to
pay its bills. These come in the
form of sovereign bonds bought by banks and individuals. The problem is; these purchasers also
buy and sell assets in other countries.
Many market watchers are worried that if Greece doesn’t pay
up, spurned investors around the globe might reduce their total volume of investments. This would increase the cost of borrowing
for other countries and companies and, some argue, could send the global
economy into a tailspin.
That concern, by itself, is dragging down our economy now. So when will this all be resolved?
