Freshman year microeconomics.

1. The Euro Crisis Could Cost
America Too

2. The Problem
• Central Bank/No Central Government
– Different systems, Goals, Programs, Agencies
• EU countries having to bailout others
– Germany/France bailout Greece/Italy/Portugal
• Investors Worried
About Potential Losses
– German bonds ↑
– French Bonds ↓
• Bad Time For
Recession

3. How This Affects The U.S.
• Two very closely linked economies will assure
that if Europe slips into a Recession the U.S. will
feel its affects
– U.S. will feel recession as Europe did after the
financial crisis of 2007
– U.S. jobs hurt by effects European sector consuming
less because of recession
– U.S. investors in Euro may sustain losses
• An increase in taxes to account for the financial
aid sent to Europe to prevent the worse
– An increase that will hopefully prevent
European/global recession and or failure of the Euro

4. Further Affects on U.S.
• Lower U.S. GDP by 0.1-0.2% in 2012
• Key service sectors also are likely to be
affected: Tourism, Finance, Entertainment,
Software, Auto and Plane sales, Coal, Metal
and Engineering
• Rise in
Unemployment by 2%

5. Possible Solutions
1. Reform of the EU itself to create stronger ties
between EU governmental systems
– EU Ministry of Finance with finance and tax raising powers
2. Allow the default and expel defaulted countries
from EU
3. Abandon the Euro and resort back to former
currencies
– German Mark, French Franc, Irish Pound, Greek Drachma, Italian Lira,
Spanish Peseta, Dutch Guilder
Unfortunately all three options have downfalls, but as
of just recently the EU has planned meetings to discuss
the 1st option