As Greece suffered a second day of civil unrest Thursday, markets and pundits alike were becoming nervous that the euro-zone crisis might infect world markets. The uncertainty helped send Dow Jones industrial average into freefall, and the influential Mohamed El-Erian—CEO of the world's biggest bond fund—warned that the problem was "on the verge of truly going global." Could the market crisis in Europe spread to the U.S. and cause a long-term crash? (Watch an MSNBC discussion about whether America could be the next Greece)
This economic disaster will worsen our recession: Fallout from Greece is dragging down the entire euro zone, says Michael Schuman in Time, which will mean "reduced exports from the rest of the world to Europe." And by boosting the value of the dollar, the turmoil makes "U.S. goods less competitive in world markets." Taken together, this will "further dampen job creation" and slow the "recovery from the Great Recession."
"What the Greek crisis means for you"
Actually, it could end up helping us out of it: Don't panic, says Jacob Goldstein in NPR. It would take "acute problems in a country bigger than Greece" (Spain, for example) to really hurt the U.S., and even that wouldn't send us back into recession. In fact, Europe's crisis might help our recovery—it's increasing demand for U.S. Treasury bonds, which drives down interest rates, lowers our inflation risk, and makes it easier to borrow money.
"Could the Euro crisis derail the U.S. recovery?"
It's the fear that will hurt us: The fears that drove today's crash are largely "psychological," says Andrew Leonard in Salon. A broke government and a rioting citizenry are a "scenario to strike fear in anyone's heart." And while the "U.S. is not Greece," our chances of fixing our own long-term budget problems are "infinitesimal." Unless we address that, "the Greek tragedy currently playing out will turn out to be a dress rehearsal for a much bigger, epic drama."
"European crisis: Stocks plummet"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- It's official: The religious right is calling it quits
- Obama just kneecapped Jeb Bush and Chris Christie's 2016 prospects
- 43 TV shows to watch in 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- The dangerously childish morality of liberal ObamaCare supporters
- The Hunger Games: Mockingjay — Part 1: 10 major differences between the book and the movie
- Why insects are the future of food
- How science is accelerating our search for alien life
- 10 classic Sesame Street moments we wouldn't show today's kids
- The myth of the stay-at-home dad
Subscribe to the Week