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How has the Eurozone debt crisis affected the US?



Economy

By James Matthews

The Eurozone debt crisis seems as though it is a small financial and economic implosion on the European continent. However, a ripple experienced in Europe can be a greater wave elsewhere in the world. Those in America would question whether something that affected the euro would have any impact on them, but economists are concerned that the US is facing a backlash from the Eurozone debt crisis.

How does the Eurozone debt crisis affect the US?

Indeed, the debt crisis doesn’t just affect markets around the world, but it also affects the US budget, believe it or not. The US pays 40% of the total capital of the IMF (International Monetary Fund) set up after World War 2, which is responsible for bailing out failing economies. So, the greater the need to rely on the IMF bailout money, the more money the US needs to pump into it.

Where does the US get the money for the IMF? The taxpayer. But it’s not just the actual events in Greece and elsewhere in Europe that worries the US. The Eurozone debt crisis timeline from Daily FX shows us how each gradual stage made the crisis worse and provides information on how to prevent something similar occurring in the US.

How can we measure its effect on the USA?

Monitoring the relationship between the USD and EUR can help us ascertain information on how the US may be affected by the Eurozone debt crisis, as Daily FX shows us. The trading pair can show whether the USD is stronger or weaker compared with the EUR. Looking into it further, the Dow Jones Chart can be used to monitor how businesses are faring in the country. As each event in the timeline of the Eurozone debt crisis unfolds, we can see how the Dow Jones Industrial Average – or DJIA chart – fares for each company that would be affected by changes to the economy. The Dow Jones provides valuable information that can allow economists to anticipate and measure the performance of businesses, so it could be used to look for any warning signs, especially given how the Eurozone itself had several red flags before the debt crisis properly unfolded.  

The connected nature of global economies means that the US will be affected by whatever happens to the Eurozone. Indeed, if not only for the repercussions for trading with the US and for affecting the IMF, the Eurozone debt crisis can also provide information that might be beneficial for US economists. The Eurozone economies were as strong as the US’s at one time, and they have skated precariously close to the edge. Could the US be on the brink of collapse too, given how the national debt has increased? If so, the Dow Jones live chart could be used to analyse how the US deals with a crisis abroad, which could indicate how it would deal with a crisis at home. The global economy is resilient and should be able to come back from many things, but being forewarned is being forearmed.  

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