3 reasons why you should care about the Greek financial crisis

Greece's shaky financial situation represents what could be the unfortunate future for many countries and their economies, including the United States.

Political and financial analysts are saying that a huge catastrophe was averted, and that the outcome of the Greek elections last Sunday could help fend off a U.S. recession.

My Big Fat Greek Wedding sales are not going to increase, and although Greece’s recent victory over Russia in Euro 2012 shocked everyone, team merchandise isn't going to drive up any stocks. So, how exactly is a Greek political election going to affect the American economy?

Sometimes the least obvious things are the most important.

1) If its sandy beaches and gyros weren't enough reasons, Greece is also a popular study-abroad destination. In the 2009-2010 school year, 3,700 American students studied abroad in Greece, and Athens was a popular travel spot for students studying abroad in Europe looking for a quick trip (easyJet alone lets you fly to over eight different cities in Greece). The more overwhelming statistic is the amount of students that study abroad in Europe -- in the 2009-2010 school year, over half the U.S. students studying abroad chose Europe. And all of Europe is watching Greece right now.

2) Financially speaking, Greece might not seem significant at first glance. It produces less than 2% of Europe’s GDP, which was estimated at $318.675 billion in 2011. Just to shed a light on how small that is, the U.S. GDP was estimated at $14.582 trillion -- about 46 times the size of Greece's.

And if we weren't in a recession, perhaps the outcome of Greece's elections wouldn't matter as much. But we are, and Greece could ignite a number of domino effects. Greece, as its own entity, perhaps would not "matter," but 11 years ago Greece made the decision to become a part of a much larger entity, which most certainly matters.

“The Greek people today voted for Greece to remain on its European path and in the eurozone,” said conservative New Democracy Party leader Antonis Samaras.

And that's a huge step in the right direction.

3) A more radical way of looking at Greece’s importance was outlined in a Paste BN editorial titled "Troubled Greece just a warm-up for Europe, USA" as well. Greece and America have a good bit more in common than good-looking soccer players. On a dramatic scale, the two countries do have some potentially scary similarities. Both countries have borrowed way too much money, both countries’ politics are increasingly partisan and unwilling to compromise and both countries’ publics are generally unwilling to sacrifice -- especially when it comes the issue of taxation. Given, there are also huge differences -- our markets are much less regulated, and we have our own currency and aren’t part of a financial or political union.

Greece, on a small scale, represents what could be the unfortunate future for many countries and their economies. The financial world is still holding its international breath, but the outcome of Sunday’s election is nothing short of promising.

In case you're curious (which I know you are), here's a brief look at the past Greek decade:

• •January 2001: Greece became the 12th member of the European Union and adopted the euro.
• •March 2005: Hosting the Olympics in 2004 took its toll, and the Greek government tried to impose an austerity budget to lessen the country’s deficit and get finances figured out.
• •December 2009: Fitch (a ratings agency) changed Greek debt rating to BBB+ (it was previously A-). For the first time in 10 years, the country is rated below the investment grade.
• •March 2010: The EU and world leaders tell Greece to accept lower bonuses and higher taxes, or risk going bankrupt.
• •April 2010: Greece received a €30 billion ($38 billion) aid package, which Athens refused to activate. Soon after, the government acknowledged it needed financial help, and the package was increased to €45 billion ($57 billion).
• •January 2011: Three agencies cut Greek debt to “junk” status.
• •June 2011: Jean-Claude Juncker, head of eurozone finance ministers, backed a German proposal to “softly” restructure Greek debt, but that private sector creditors’ contributions should be “voluntary”. Tons of protesters marched against the EU’s set austerity measures.
• •November 2011: Prime Minister Papandreou resigned after his referendum plan drew major criticism. The former head of the Bank of Greece became the interim prime minister.
• •February 2012: Protests in the streets of Athens turned violent as the Greek parliament approved a controversial package, with guidelines set by the EU, as the cost of the €130 billion ($164.8 billion) bailout.

Anika Kempe is a senior at the University of Richmond double-majoring in journalism and political science and is an intern for Paste BN College during the summer of 2012.

This story originally appeared on the Paste BN College blog, a news source produced for college students by student journalists. The blog closed in September of 2017.