The Global Impact of a Greek Default

In a testimony  before the Senate Subcommittee on National Security and International Trade and Finance, Resident Fellow Desmond Lachman discussed the implications of Greece’s economic and political crisis:

The implications of a Greek default for the United States are not to be underestimated. Immediate action by the European Central Bank (ECB) to limit contagion to the rest of the European periphery must be expected to further significantly weaken the Euro against the dollar that could have a material impact on the US trade balance. From a longer term perspective, should market financing for a country as highly indebted as Italy dry-up in the wake of a Greek exit, one should expect renewed tensions in global financial markets that could constitute a significant headwind to the US economic recovery. In addition, were Greece to become a failed state, a geopolitical price might be paid in the sense that Russia would have an opportunity to gain a firmer foothold in the Balkans.

Read his full testimony, “Economic Crisis: The Global Impact of a Greek Default.”

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