Greek Exit from Euro Would Hurt US Recovery

American markets were closed Monday for the Memorial Day holiday, but European markets remained open. The biggest question weighing on the region is whether Greece can remain in the euro zone.

There’s no legal process for a member of the euro zone to exit the 17-nation currency union. But with Greece threatening to balk on austerity measures it agreed to in exchange for a fiscal rescue package, European officials are preparing for what was once unthinkable.

Stuart Eizenstat served as ambassador to the European Union and deputy treasury secretary under President Clinton. He says a Greek departure from the euro would drive up interest rates on Italy and Spain, economies far too large to bail out.

“So now we have a situation in which a country which is only 2% of the total GDP of the euro zone, a really tiny economy, threatens to unravel the entire euro and create a crisis with ripples that come onto our shores as well.”

A collapse of the euro would cause the region’s economies to crater, threatening the U.S. economy’s fragile recovery. Collectively, the euro zone is Houston’s second-largest foreign trading partner after Mexico.

Bio photo of Andrew Schneider

Andrew Schneider

Business Reporter

Andrew Schneider joined KUHF in January 2011, after more than a decade as a print reporter for The Kiplinger Letter...