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Unless you’ve been living under a rock for the past few weeks, you’ve probably noticed there’s been a lot of news coverage on the debt crisis in Greece. Even if following the economy isn’t your thing, you should really be aware of how Greece’s financial problems could impact us as American individuals.

“[Few] of us are looking at what’s going on in the world,”  Dr. Julianne Malveaux, Founder of Economic Education said. “Because we’re not looking at it, we see what’s happening in Greece and we think, ‘this doesn’t have anything to do with us’…[I]t does because we live in a global economy.”

“We see what’s happening in Greece and we think, ‘this doesn’t have anything to do with us’…[I]t does because we live in a global economy.”

How Greece’s Economic Problems Impact Us

There are four big reasons why you should be following what’s happening in Greece: the most obvious reason would be your stock portfolio if you’re invested in European countries.

“If you have too much stock in international mutual funds you may want to switch it out or switch some of it out,” explains Malveaux. “I would say that in a general European portfolio that’s mostly invested in the euro…you might lose 5 to 10 percent…”

The second most obvious reason here is how it might affect your travel plans. If you’re looking for the best bang for your buck on your next vacation, Europe would probably be a good idea since the euro’s strength has been fluctuating amid the debt crisis. Now the exchange is at $1.11 but in March, the conversion hit a 12-year low ($1.05) and Greece is still leaving businesses open for tourists. However, it’s up to you on whether you think Greece in particular would be much fun at this point. The financial turmoil has prompted tension and protests among residents. Furthermore, the US Embassy issued a security statement as a warning for visitors.

Thirdly, our 401(k)s could take a hit. Since markets are dropping around the world, our market in America that has been rising and encouraging people to buy for the past six years could come to a halt. The concern isn’t very deep yet, as we’ve regained ground throughout the problems raised by Greece relatively quickly. Still, we could be in danger if debt issues spread to other countries like Portugal and Italy.

Finally, mortgage rates have been low since the Great Recession, but the US central bank could raise rates by September. That might not happen because government officials might not want to risk fluctuating the market again, especially if Greece is still in economic ruin and impacting other countries. More than that, raising rates could impact the strength of the dollar which would then limit US exports.

The Latest News Coming Out Of Greece

The latest that has happened in Greece amid its economic crisis is that leaders are now asking for 53.5 billion euros (59 billion USD) as part of a three-year bailout package from the Eurozone bailout fund. The proposal is filled with austerity measures like pension cuts and hikes in corporate taxes, taxes on luxury items, processed foods, health services, transportation, hotels and restaurants. Parliament has expressed support so far and officials may come to a deal before their Sunday deadline. As a result, the summit that was originally planned for this weekend to decide if Greece will stay in the Eurozone may be cancelled.



With Parliament’s support, Greek leaders have been cheesing hard for the camera, saying that they’re optimistic about being able to reach a deal with the country’s creditors. But critics have come down on President Alexis Tsipras and his team for putting forward a proposal that is highly similar to the last proposal that was last presented by the creditors and that is much less generous than what was offered to the people of Greece in the past.

A Brief History On The Greek Debt Crisis

So how did Greece get caught up in this mess in the first place? It’s been going on for a while—five years, in fact, when the country first realized that it had been grossly underestimating its deficit as result of the Wall Street crash from 2008. In 2010, most international banks and foreign investors sold their Greek bonds, so they were no longer affected by what happened in Greece. Then, the troika, a.k.a. the International Monetary Fund, the European Central Bank and the European Commission, saved Greece with a 240 billion euro bailout but it still wasn’t enough to help the country. The measure helped with international loans, but not with the national economy. As a result, Greece’s economy dropped by a quarter and unemployment went up to a whopping 26 percent (with youth unemployment at 50 percent).

As you can imagine, Greece became a huge burden to the rest of the Eurozone, and many argued that Greece should be the first country removed to save other countries from being sucked into its financial problems. Opponents said that removing Greece would shake up the region’s stability and would dispel Europe’s united front; some economists argue that keeping a united front that could ultimately make the Eurozone stronger. Plus, Greece exports 65 percent of its goods, so it can’t afford to be alienated by the world economy.

Supporters, on the other hand, say that removing Greece from the Eurozone is only fair because it didn’t clean up its act as it was required to and no one else should be further responsible for cleaning up its problems that have become so out of hand. Other countries would be better off without it and it is possible for Greece to rebuild its financial independence by using its original currency, the drachma, if it is finally left alone. The smoking gun is that Greece only makes up 2 percent of the Eurozone economy, so Greece leaving the coalition might not be as much of an issue as they previously thought.

What Happens Next

No one knows for sure what is going to happen. The latest bailout may or may not be passed. If the country misses its deadline of paying 3.5 billion euros to the ECB by July 20, it could essentially force Greece out of the Eurozone and cause its banks to collapse. The European Central Bank could provide a stimulus by printing more money and lowering interest rates, but that could create inflation in other countries that are already thriving. One thing we do know is that Angela Merkel, the chancellor of Germany and de facto leader of the European Union, has made it clear that she won’t be letting Greece get off easy by writing off the debt under any circumstances.

Weekly Government Cabinet Meeting

Source: Adam Berry / Getty

In an interview with CNN, Former German Defense Minister, Karl-Theodor zu Guttenberg, said that even if Greece missed its deadline on creating a deal this weekend, it’s unlikely that the deadline won’t be extended again based on how many deadlines Greece has been given in the past.

“I would like to let them go and have a controlled Grexit, but I don’t think that will happen. I think that the chancellor will do everything to keep them in the shaking bowl and to keep the impression that the members of the Eurozone are united…No one wants to be accused of obliterating a wonderful European idea.”

“No one wants to be accused of obliterating a wonderful European idea.”

Malveaux, however, has the impression that Merkel feels pressured to appease her constituency that is more frustrated and less sympathetic to Greece’s problems as they are with their own. Malveaux thinks that austerity measures are a bad idea because stifling spending could further stifle the economy at large, and she maintains that debt relief is the best solution. If Greece were pushed into being more financially independent, she explained:

“Internally, it means they have more control of their finances. However, people have contracts with euros drawn as the currency. So what do you do about that? Work permits, investment contracts are written in terms of the euro. And nobody knows how that’s going to work out.”

It’s a bleak future for Greece, no matter how much sugar and candy President Tsipras wants to sprinkle on top of it. Should the nation go bankrupt, things would look a lot like it did here in America during the Great Depression. Banks would close, leaving residents without money or control over their pensions. Already, grocery shelves are empty from people stocking up on food and gas stations are packed from people trying to get fuel. Medicines could soon run out. The government may even be looking at an uprising.

Has The US Gotten Involved?

The US hasn’t intervened much, as President Barack Obama says that this is an issue European officials should resolve among themselves. But the White House has stated its desire for Greece to remain in the Eurozone. Even if Obama did want to get involved, it would be awfully hard to convince legislators to spend money on Greece’s debt since conservatives are determined to cut national spending.

Updates on Greece seem to be coming by the hour, so we’ll let you know if and when anything else major happens next here on


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If You Don’t Care About The Greek Debt Crisis, Here’s Why You Should  was originally published on