Fears about Greece going down the drain are driving down stock prices. But how will the European debt crisis hit us here at home?
Greece is in a severe depression. Those citizens who are pensioners are in terrible shape, some just one step away from starvation. This tragedy has been unfolding in slow motion because of decades of corruption and economic mismanagement.
What will happen from here is so hard to predict. I read the European financial press and they had six pages of stories today exploring all kinds of different scenarios. This could lead to economic upheaval, or even the death of democracy in the country and the rise of a dictatorship in the ugliest outcome.
Top that off with fear that the economic contagion could spread to Portugal, Italy, Spain and maybe even Ireland.
In many countries across Europe, an undeniable recession is under way. That in itself will lead to some slow down here in the United States and in Asia. But this will not be a tragic circumstance for us.
In fact, as sad as it is to say, there will also be collateral benefits as your dollar will go further. So much of what we buy will drop in price. You’re already seeing the effect on gasoline prices, which I’m expecting will go down even further over the next two months barring any funny business with Iran or Korea.
Meanwhile, the painful inflation that looked like a problem is likely to subside for us because of Greece and Europe. If things get real bad, you’ll hear about deflation, which can be even worse than inflation. But that’s just speculative.
In the short term, I see no significant harm to us from what’s going on in Europe. That could change depending on how ugly it gets. But for now, we can just chill until further notice.