Global politics and economies — of Greece and China, in particular—– and whether the U.S. economy is likely to be affected by the current turmoil is the topic of an interview with UCSB political economist Benjamin Cohen appearing at the university's online news site, The Current. In Andrea Estrada's talk with the professor, Cohen says that Greece's debt restructuring problems don't affect the U.S. economy, or even Europe's, since the country's gross domestic product is about 2 percent of the total European Union's.
But the maneuvering underlying the current crisis holds the seeds of potential repercussions. With the International Monetary Fund, European Commission, and European Central Bank breathing down their necks for austerity programs — which increased already significant unemployment and poverty levels — countries like Italy and Spain went through similar debt crises; if Greece goes its own way, those countries' citizens are going to ask why they've had to suffer. "That means Italy; that means Spain; that means Portugal,” Cohen said. “Italy is the third largest economy in the eurozone, and Spain is the fourth. So they become much bigger players and have a much bigger impact on the European economy.” Cohen goes on to explain how the problem would grow to include the U.S.
“Europe is 25 percent of the world economy,” Cohen said. “It is collectively our second-largest trading partner. And if Europe starts to have serious difficulties as a result of a contagion effect, the consequences for the U.S. could be serious.”