Economists and market analysts have offered various explanations as to why a failure of the Greek economic system would have drastic impact on the United States economy. Within these explanations, terms such as; Gross Domestic Product (GDP), Sovereign Debt, and derivatives are used, which at times can be quite confusing to a reader, especially if he or she is not educated in finance or economics. Wrapped up in these complicated terms is an explanation as to why a failure of the Greek economy would have a chaotic effect on the United States. I am going to offer a common sense approach to this situation. As a business analyst in the financial industry, my job is to analyze and form opinions based on raw financial data. When I look at this situation I can see several common sense factors as to why the Greek economy affects the United States; however, there is one factor that has accelerated this affect, which is the influence of technology in the investing process and the global economy. I am not saying that technology is the only factor, not by any means; however, technology has been the accelerant and technology is the basis for a common sense explanation to the European debt crisis.
It would be ludicrous to suggest that GDP, sovereign debt, and derivatives do not have an impact on the Greek Economic Crisis; however, in my opinion, the crisis has been accelerated by technology. Let’s take a look at the situation from a common sense standpoint. Think back to twenty or thirty years ago, the world of investing had quite a different feel; it was much more difficult to invest in overseas markets and in foreign government bonds. Why was this so? Technology was not the same back then as it is today. In the present time, any day trader with a laptop and a smart phone can invest in overseas markets, including government bonds. Twenty years ago the idea of investing via a phone was as best something that we thought of in a futuristic movie. With the rapid advances in technology over the years, the global markets have become more and more intertwined. This is precisely why the Greek Economic Crisis has impacted and will continue to impact the United States. Furthermore, this is why a failure of the Greek economic system would have a chaotic impact on the United States. If Greece happened to default on its’ loans, countless individual and corporate investors in the United States would lose substantial amounts of money.
In addition to technology’s impact on the global investment community, technology has allowed businesses to more easily ship its’ products and services overseas. Think about it, twenty years ago it was much more difficult to ship items overseas. In today’s economy, a customer in Europe or China can place an order online to have a product shipped overseas. Twenty or thirty years ago this was not in the realm of possibility. With this in mind, it does not take any research to figure out that businesses in the United States can easily ship products to overseas markets, including those markets in the Euro Zone. Furthermore, extensive research is not required to figure out that if Greece’s economy falters and forces other European markets to fail, then American businesses that have a presence in those markets will be negatively impacted. What happens if American businesses are impacted negatively? The answer is simple, American companies will be forced to eliminate jobs in an effort to offset losses in sales. As we all know, when there is substantial job loss, families will suffer, and our economy will most likely slip into another recession. This is why, in a common sense approach, a failure in the Greek economic system would have a chaotic impact on the United States. This is exactly why Greece and the rest of the European countries need to hash out a package to successfully eliminate sovereign debt and bring stability to the European markets.
No outside sources were used in this editorial, this is purely an opinion from someone who works and looks at the raw data on a daily basis.