|

Greek Debt Crisis Will Impact U.S. economy


Greek debt crisis will probably directly affect the U.S. economy and exports hitting U.S. financial system, regional leaders of the Federal Reserve of Atlanta, Dennis Lockhart, warned on Monday (23 / 5).

He said that adjustments in the entire European Union against the financial problems originated from the Greek crisis could reduce the growth of the euro zone and restrict U.S. exports to the region.

The crisis could also cause the flow of currency into euro assets, protection of the U.S. dollar, causing appreciation against the dollar and hurt the competitiveness of American exports.

The EU as a whole is the largest export market for U.S..

In addition, Lockhart said, the possibility that the U.S. financial crisis caused widespread shock to financial markets can daapt play in the banking system or in the form of a general withdrawal of the national debt.

"Greek crisis may directly affect the U.S. economy," said Lockhart warned, the first U.S. central bank officials that clearly menungkapkan such concerns.

He said that the possibilities which he made in his view has not been described so far.

"But the developments surrounding the Greek situation deserves full attention," he said.

The 16-nation euro zone is experiencing the worst crisis in its history amid rising government debt, declining economic growth rates, and rising social protest against the savings measures and high unemployment.

Financial issues across Europe most severe in Greece, which has the highest national deficit and has been the focus of financial market concerns that dragged down the value of the euro.

Greece has been a disastrous mess in financial markets since late last year, causing the warning of the increasing public debt, especially in developed countries.

At the end of last week, the IMF warned rich countries to be wary of increasing government debt because it could slow economic recovery from recession.

Risk has grown to the level of U.S. credit and other large public debt issuers, Moody's Investors Service warned recently.

"Greek drama we are witnessing is supposed to increase recognition of the urgent need in the U.S. for a credible path towards financial sustainability," said Lockhart.

"Public awareness of the serious imbalance in the fiscal state should be improved," he said.

According to the Congressional Budget Office, the U.S. federal budget deficit rose from an average of 2.4% of GDP in the period 1970-2008 to 10% in 2009.

"Currently there is no budget line in the considerations that will keep the public debt so as not to grow into gross domestic product. Obviously, the ratio of debt to GDP continued to rise is not sustainable and a major concern," said Lockhart.

"Finance is very limited government in all levels. All it shows the risks of fiscal pressure from the other side for broad economy.




source

Related Post



Posted by Dwi Anggono on Wednesday, May 25, 2011. Filed under , . You can follow any responses to this entry through the RSS 2.0. Feel free to leave a response

0 comments for "Greek Debt Crisis Will Impact U.S. economy"

Leave a reply

Blog Archive

Recently Commented

Recently Added