What would Greek exit mean for the U.S. economy? - News and Current Events | futures io social day trading
futures io futures trading


What would Greek exit mean for the U.S. economy?
Updated: Views / Replies:257 / 0
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

What would Greek exit mean for the U.S. economy?

  #1 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

What would Greek exit mean for the U.S. economy?

WASHINGTON (Reuters) - Uncertainty over the fate of the euro currency is already dampening U.S. economic growth and any significant worsening of the crisis would deal a blow to a recovery that is gradually gathering steam.

Economists estimate that volatile markets and business uncertainty over the fate of Greece and the policy course in Europe is already shaving anywhere from one tenth to one half a percentage point from U.S. 2012 gross domestic product growth.

In a Reuters poll last week, U.S. GDP was forecast on average at 2.3 percent for 2012 and 2.4 percent for 2013.

The direct hit to growth comes through trade. U.S. exports to the European Union account for 19 percent of total exports, and those to the euro zone represent 13 percent of the total. But when calculated in terms of GDP, the share is tiny - only 1.3 percent of total output.

The indirect effects are another matter. Europe in 2010 accounted for 25 percent of world trade, according to Deutsche Bank. Europe also is the biggest trading partner for China and the United States. Loss of this market would ripple worldwide and slow global growth.

The other indirect impact is through the financial sector.

If Greece were to leave the euro zone, it would raise questions about the survival of monetary union and trigger turmoil in markets. Business investment would stall, banks would pull back on credit, and lost wealth as equity prices fall would cause consumers to slow their spending. Commodity prices would plunge, helping importers but hurting growth in export economies.

The extent of the damage would depend upon how quickly global policymakers could stop the rout and stabilize markets.

Following is a look at three scenarios for the euro zone and the likely impact on the U.S. economy.

EURO ZONE STUMBLES ALONG

SCENARIO: Greece elects a government on June 17 that continues implementing the EU/IMF bailout program, possibly with some softened conditions. Greece stays in the monetary union for now. Spain recapitalizes its banks, possibly with some EU help. ECB liquidity injections and EU-wide guarantees help stabilize the big French and German banks to insulate them and the broader financial markets from further damage. Bouts of market uncertainty continue in the months and years ahead, but gradually EU integration advances.

IMPACT: Ongoing volatility in financial markets and slow-to-mildly negative euro zone growth would continue acting like a low-grade fever weakening U.S. growth. This already is the baseline scenario for most analysts' forecasts. TD Economics said it has marked down its 2012 outlook for 2.0 percent growth by about a quarter to half a percentage point because of Europe. IHS Global Insight has trimmed about one tenth of a point from its 2.2 percent forecast for this year.

GREECE LEAVES EURO ZONE

SCENARIO: An anti-austerity government takes power in Greece and rejects the bailout terms. The EU and IMF stop lending Greece money. Athens runs out of cash, defaults on its debt and starts printing its own currency to pay bills. Its banking system collapses. The European Union has had time to draw up contingency plans and succeeds in preventing the currency exit and debt default by Greece from pulling down Spain, Italy and Portugal and manages to stabilize its banking sector quickly. The Federal Reserve may help provide market liquidity through new FX swaps with Europe and quantitative easing.

IMPACT: Greece accounts for only 2 percent of euro zone GDP and U.S. exports to Greece are negligible. So too is U.S. credit exposure. U.S. money market funds have largely moved away from investing in Europe. Greece owes the private sector $70 billion, but mostly that is to German and French banks, according to the Institute of International Finance. The bulk of its $460 billion in external debt is held by the European Central Bank, the European Union and the International Monetary Fund.

Hence the direct impact of a default and euro exit by Greece on the U.S. economy would be quite small, as long it were contained - but that is a big "if." Once one country leaves, market focus would switch to other deeply indebted countries - Spain, Portugal, Ireland and even Italy. European policymakers would need to sling a safety net under these countries and big EU banks to prevent the contagion from spreading and imperiling the euro zone.

The immediate shock of a Greek exit probably would shave half a percentage point from U.S. GDP in the quarter when it happened and soften growth in the subsequent quarter, said Craig Alexander, chief economist at TD Economics. But if managed smoothly, a Greek exit could cause a burst of optimism that the euro zone woes are over and strengthen U.S. output subsequently, he said.

Nariman Behravesh, chief economist at IHS Global Insight, said his firm is about to change its baseline forecast to a managed Greece exit, probably early next year. He expects to cut its U.S. GDP forecast for 2013 of 2.4 percent by two to three tenths of a percentage point.

MESSY GREEK EXIT, DAMAGE SPREADS

SCENARIO: Greece crashes out of the euro. Yields skyrocket for Spanish and Italian bonds locking them out of the government debt markets. Spanish and Italian depositors withdraw cash in panic over the possibility of their countries leaving the euro zone, too. Global equity markets sink. Investors pile into U.S. markets as a safe haven. The U.S. dollar soars as the euro plunges. European banks face funding shortages as investors shun the euro zone and the banking system seizes up. Global markets become chaotic.

IMPACT: This is the nightmare scenario. The economic impact in the United States would be felt through trade, financial linkages and business and consumer confidence. The size depends upon how quickly policymakers could stabilize the situation and whether any big financial institution whipsawed by a rapid repricing of assets is in danger of collapsing.

At the very least, shockwaves through financial markets would cause a downward jolt to the U.S. economy, immediately erasing at least half a percentage point from growth in that quarter.

If Europe's banking system shuts down, violent shudders through global financial markets would equal or surpass those seen when Lehman Brothers collapsed in 2008. Banks are better capitalized today than four years ago and therefore better able to weather the storm. But with interest rates near zero and governments fiscally stretched, advanced economies this time around would have fewer tools to offset the hit to growth.

At the very least, the U.S. and global economy would fall back into recession, and some economists warn it would be far deeper and more dangerous than the one of 2007-2009. The U.S. Fed would be almost certain to embark on a fresh round of bond buying, known as quantitative easing, to keep financial markets highly liquid and hold interest rates low.


What would Greek exit mean for the U.S. economy? - Yahoo! Finance

Reply With Quote

Reply



futures io > > > > What would Greek exit mean for the U.S. economy?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Juncker slams 'propaganda' of Greek euro exit kbit News and Current Events 0 May 14th, 2012 09:16 PM
Europe's Central Bankers Now Talking Publicly of Greek Exit Quick Summary News and Current Events 0 May 14th, 2012 06:00 AM
Why a Greek Debt Deal May Not Bring End of the Greek Saga Quick Summary News and Current Events 0 March 8th, 2012 07:20 AM
Risk of Greek Exit from Euro Zone Looms Over G20 Quick Summary News and Current Events 0 November 3rd, 2011 03:10 AM
If Economy Is So Good, Does That Mean Fed Will Exit? Quick Summary News and Current Events 0 December 14th, 2010 02:40 PM


All times are GMT -4. The time now is 07:45 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-17 in 0.08 seconds with 19 queries on phoenix via your IP 54.163.209.109