Conflicting Views on the US

After our discussion on Friday, it was evident that Greece’s current situation can impact not only Greece, but also the US.  To what extent will their economic crisis affect us and how great will their impression be? I found two article that show different opinions on this Greek drama. 

According to David Manges, the managing director of municipal trading at BNY Mellon Capital Markets,  “a Greek default would lead to increasing financial problems for European banks and investors.”  It would force them to sell to US investors taxable municipal bonds, thus increasing the prices.  Other analysis suggest, that Greek defaulting will “push Europe into a recession...[and] lower exports from the United States to Europe.”  It may “ultimately lead to lower tax receipts for state and governments.”  There is also speculation that Greece’s problems may become a “financial contagion in Europe,” with other countries wanting to leave the euro (http://www.bondbuyer.com/issues/121_99/greece-exit-euro-currency-default-municipals-1040018-1.html). 

            James Bullard, of the Fed, says on the contrary that Greece “could exit the euro zone without doing deep damage to the US and European economics if the transition is handled properly.”  He feels that if “the European Central Bank is committed to backing the continent’s brittle banking system,” there should be no problem.  These other analysts are overreacting and he expects the US economy to rise up as a result (http://www.therepublic.com/view/story/BRE84N16C/US-USA-FED-BULLARD/). 

            However, what is going on with Greece and its impact is arbitrary.  No one can exactly predict what will happen.  What if we are overacting because we are in a recession?  The only thing we can hope for is that this drama has a better ending than we predict; maybe we will learn life lessons from it like we do with other Greek plays.