By Kelli Bennett, Editorial Intern
For many, it is hard to stay abreast of international affairs, but getting familiar with current events is a necessity in a professional environment. As you dine with fellow colleagues or share small talk with your boss, mention of Europe’s economic crisis has most likely entered the conversation.
CNBC’s Mark Koba, offers a summary to the economic crisis. He elaborated on the key players: Germany, Greece, Spain, Ireland, Italy and Portugal. After a complete read of this article the issue at hand will be easily comprehended.
This crisis has spread across three years and at this rate, the economic turmoil will linger for years to come. So why is this situation so newsworthy now? Because we as Americans are worried the problem can slow down the rebuilding of our suffering economy.
1. U.S. banks are ‘tethered’ to those in Europe.
U.S banks have about $300 billion each in France and Germany, the leaders of the eurozone and about $50 billion each in Italy and Spain — countries that could be dragged into default if the crisis escalates.
2. A potential threat to U.S. exports:
More than 20 percent of all U.S. exports go to Europe, making it the nation’s largest trading partner. About 14 percent go to the 17 eurozone countries, behind only Canada and Mexico.
Total exports to the European Union were $177 billion in the first eight months of 2011, up 15 percent from last year. Even so, the U.S. is running a $65 billion trade deficit with the EU.
Germany and Great Britain are by far the USA’s biggest trading partners.
3. U.S. companies’ investments in Europe are at stake
4. The potential impact on individual investors
U.S. money market funds already are moving assets elsewhere. About 19 percent of prime money-market funds’ assets are in eurozone countries now, down from about 33 percent last November. They’ve eliminated virtually all lending to banks in Italy and Spain.
5. A ‘dramatic effect’ on the 2012 election?
Issue No. 4 holds the most weight to me. As stated before, the United States is still healing financially and emotionally from the recession; and though this crisis is not affecting citizens directly, it is still an extremely scary reality.