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(Washington Post) By Howard Schneider - To get a sense of how vulnerable the U.S. economy could be if the euro currency union cracks apart, start with the volume of U.S. exports to the euro zone — $153 billion in the first six months of the year. Add several hundred billion dollars in investments by U.S. banks in the euro zone and several trillion dollars’ worth of other financial contracts between the two economies.
As European leaders meet later this week to try to resolve their spreading debt crisis and prevent the breakup of the 17-nation euro zone, U.S. politicians, corporate leaders and financial analysts are watching anxiously for a breakthrough.
The alternative could be staggering for the U.S. economy. American banks and other companies could find themselves battling with any country that leaves the euro union and reinstates its own currency.
“The risk is likely paralysis,” said Michael Hood, a market strategist at J.P. Morgan Asset Management. “You won’t even know what people owe you.”
The summit this week is the latest in a long series of meetings convened to deal with problems that have expanded from concern about Greece’s high levels of government debt into a full-fledged threat to the euro union.
Although a solution has eluded them for two years, European officials insist that the worst-case outcome — an exit by one or more countries from the euro zone — will be avoided.
Read full story at Washington Post...
