How will the Magnitude of the Debt Crisis in Greece Affect the World?

With the US superpower economy needing to revive from the current recession, the growing debt scenario in Greece is exactly the last thing on their wish list. Recalling back on the Great Depression in 1929, according to Ben Bernanke, the chairman of the Federal Reserve, he states that the Great Depression is largely caused by the tight monetary policies adopted by the Fed at that time. Coming back to the current situation, the Greek government's monetary policies are being threatened as it's present debt situation will definitely have an impact on the European and US economy.

The EU is doing everything in its will power to restrict the Greek debt within its continental boundaries so that the other countries using the Euro as the currency will not be affected. With its current scenario, it is a high possibility that the Greek government will be forced to default on its debt causing an increase in interest rates. The magnitude of the whole circumstances in Greece have caused a lot of uncertainty within the US treasury leading to a flight-away of investors from its stock market. However, investors may also not take the current Greek situation as a deciding factor on whether to hold on to the US markets as Greece represents only 2% of the European economy.

Obama has recently filed in his plan to double exports in the next five years as a step to reducing the recession in the US which is causing a high level of unemployment. But this could suffer a setback if the Greeks do not recover from its current complications. The Euro, all in all, will most probably face a drop in its value compared to the dollar which will come to as another predicament to Obama as exports will be more expensive. Moreoever, with the interest rates soaring, the Europeans will now have difficulty purchasing US products.

In conclusion, in the short run, the current Greek economy will is just affecting the US market in general at the moment but the consequences in the long run will see colossal effects on global economy.