The economic fallout from Europe can either be good or bad news for your wallet depending on your habits and who you do business with.
People ask me, “What difference does what happens 4,000 miles away make to my life? Why does it matter to me?” Well, first off, we do a fair amount of trade with Western Europe and it’s not been pretty to see their economies imploding.
But what’s going on in Europe is similar to what went on back when we were governed by the Articles of Confederation in our earliest colonial days. At that time, each state had its own money, its own trade rules and its own barriers at borders.
Unfortunately, it wasn’t working for us. That’s why we had the secret Constitutional Convention in 1787 where our founding fathers came up with a common currency for all 13 states and the idea for a central bank that was adopted much later in U.S. history.
In Europe, there is a central bank and a common currency, yet each country acts like it’s in its own orbit like our Articles of Confederation days — but with money that is trusted across the borders. Sadly, that trust broke down because of bogus budgets that were written by people who lied and reckless lending in Spain that was much like what happened with our banks.
Yet the difference between us and Spain, as just one example, is that we had the resources to bail out our banks (whether that move was right or wrong) and they don’t. Spain does not have resources to deal with all the failing banks. Greece has failed economically as a country. And there are problems all around Southern Europe anywhere you look, be it Portugal or Italy.
So, back to you and what this means in your life: We do benefit in some ways from the European financial crisis. If Europe keeps self-destructing, I believe we will see gas falling below $2.50 in our lowest-cost markets.
Meanwhile, if you want to travel to Europe, travel is so much cheaper right now because tourists are skittish about the continent. The images of people rioting in Greece scared people off. But the flip side of that is there are deals on accommodations and all the attractions are much less crowded. Don’t be scared off!
People think the news is either all good or all bad for us on our shores, but that’s not the case. Sure, the stock market is stinking it up because of what’s going on in Europe. If you’re a company that does business with Europe, you’re feeling the pain. But, again, the flip side is that there are travel deals there for you.
So it all comes down to what you do and who you do business with whether the problems in Europe are hurtful, helpful or neutral to your life.