European economic crisis could have negative impact on US

By Lauren Dielman

Europe is currently going through an economic crisis and the euro, the European Organization’s (EU) form of currency, may soon be abandoned. This will have an impact not only on Europe, but on the U.S., too.

This week essentially determines whether the euro will collapse and a financial panic will ensue, according to a Sunday article by the Associated Press.

Daniel Unger, political science professor, said this crisis will have a negative effect on U.S. exports, since a lot of U.S. exports go to Europe.

Alexandria Innes, political science instructor, said it is hard to predict how what is going on in Europe will affect everyone else. It depends on how quickly the euro can rally back Innes said.

The article said leaders from the European Union’s 27 countries are meeting on Friday in hopes of saving the euro. French President Nicolas Sarkozy and German Chancellor Angela Merkel will be at the meeting. They will propose new rules that are more enforceable in order to make sure governments that are a part of the EU don’t spend or borrow more than they can handle. Even if these rules are agreed upon on Friday, enforcing the rules and putting them into place could take more than a year. Some economists think that these new rules may not even be enough to stop Europe from frequently borrowing money.

“[The euro] is under threat because market players have lost confidence in countries which use the euro,” Unger said.

According to Unger, the Germans could try to save the euro from disappearing completely, or the entire system will fall apart.

“The question is: Are the Germans going to pay to bail out the euro or is the system going to collapse?” Unger said.

According to the article, a global financial panic would be the worst case scenario. In this case, banks all over the country would be too afraid to lend money to each other. This would mean that business would not get the short-term financing they depend on to run their daily operations.

Innes said there would be a negative impact if the euro didn’t exist.

“I would imagine the effect would be negative in terms of unity,” Innes said.

Unger said the economic crisis in Europe will ultimately affect people in the U.S., too.

“The Europe economy is going to do less well, so our economy will, too,” Unger said.