Why Should We Care About Greece’s Fiscal Problem?

Excerpt from March 22, 2010 Speech by Dennis Lockhart, President and CEO of Federal Reserve Bank of Atlanta

What do fiscal problems in Greece have to do with my economic outlook for the United States?

I see three ways the Greek crisis might directly affect the U.S. economy. First, adjustment across the EU to fiscal problems could dampen euro area growth and constrain U.S. exports to that region. The European Union as a whole is this nation's largest export market. Second, related to this, safe haven currency flows from the euro into dollar assets could cause appreciation of the dollar and hurt U.S. export competitiveness. Third is the possibility that the Greek fiscal crisis could lead to a broad shock to financial markets. This could play out in the banking system or in the form of a general retreat from sovereign debt.

10.03.22 (Source: Federal Reserve Bank of Atlanta)