How bad would a Grexit be for America?

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published 6 July 2015

No one knows for sure — but in the wake of Greek voters' decisive rejection Sunday of a European bailout referendum, the Obama administration is certainly worried. Here's Ben White at Politico:

The overwhelming "no" vote pushes Greece closer to a potentially messy exit from the eurozone common currency union. It also sets up possible global market chaos and presents a fresh headache for the White House, which has had little success pushing for a deal that would prevent a Greek exit.Some in the administration fear that if Greece leaves it could lead to the eventual collapse of the entire eurozone, a destabilizing event that could crush markets and damage a U.S. economy that is growing at only around 2 percent a year and is vulnerable to outside shocks. [Politico]

Although the Greek economy is only the size of the state of Oregon — and its population the same as that of Ohio — a full-blown default would weaken growth in America's main trading partners. In addition to dampening U.S. export growth, a Grexit could spill over into global markets. Nobody can predict how or to what extent. But the risk of Grexit contagion weighs on the U.S. Federal Reserve. The biggest question over its return to normal interest rates sits in the Aegean. [Financial Times]

How likely is all this to come to pass? Many analysts peg the odds of a Greek exit at 75 percent or higher.