Economic Issues Regarding Greece and Essay

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This will immediately decrease the funds of lending countries. And most importantly, this situation with the sovereign risk is not only characteristic to Greece, but to various other countries, including the United States. "More especially, the IMF is concerned that higher sovereign risk in countries like Greece can spill over to domestic banking systems and across borders, thereby triggering a second global economic crisis. It is also important to note that sovereign risk is not confined to Greece, but there are a number of other global more systemic important countries that fall into this category, including the world largest economy, the U.S.A." (All Africa, 2010).

In terms of the immediate impact, this would be most obvious within the neighboring Balkan countries. Greece is one of the largest investors in the Balkan region as well as one of the greatest donors. When its economic problems hit, the country's investments and donations would significantly decrease, to eventually impact the initial destination countries. Additionally, Greece is also the host country of millions of immigrants from neighboring states (Fotiadis, 2010). The respective states would no longer receive funds from neither the Greek government, nor from their own citizens employed in Greece.

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Aside from the loss of a donor and an investor, the European countries would also be faced with the loss of a trade partner. At the level of the European Union, the member states have already weakened their financial strength in order to support Greece. Had they not done this, the weakening Greek economy could have led to the devaluation of the euro. This risk is still present nevertheless.

As far as the United States goes, the American investors are incrementally worried about the deepening crisis in Greece. And the main reason in this sense is constituted by the possibility for the Greek crisis to expand and impact the other countries in Europe, which could then easily mean that the Unites States is impacted. Given that the countries in Europe represent important trading partners for the U.S., their economic demise could materialize in the creation of further economic problems in the North American country. U.S. "investors fear that Greece's debt problems could spread to other European nations and ultimately damage the U.S. economy. A weak European economy hurts American exports and the profits of U.S. multinationals" (Boston, 2010)......

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