If it were left up to Socrates, Greece would have chugged the hemlock by now and had it over with. However, the economic decisions facing the Greek people and their government might perplex even today’s greatest philosophers and economists alike, considering the possible global repercussions of a “Grexit” versus further austerity measures and continued downward spiraling that could accompany them.

On a macro and U.S.-centric level, we should indeed be concerned with what is going on in Greece. A default on its sovereign debt poses a situation where other weaker and struggling eurozone economies (i.e. Spain, Ireland and Italy) could follow in Greece’s footsteps.  

This “contagion” scenario could lead to increased stress in the global financial markets, halting or significantly slowing the U.S. economic recovery from the Great Recession. Furthermore, the crisis in Greece and potential fallout in the eurozone weaken the euro against the U.S. dollar, meaning a higher price tag for U.S. exports and subsequent fall-off of European appetite for U.S. goods.  

This could lead to a slowdown in U.S. manufacturing, which would have a direct effect on employment numbers, wages and the overall health of the U.S. economy. Add to that the potential for the ever-strengthening greenback to induce an excessive fall in overall inflation in the U.S. market, and you have a scenario that the Fed, the White House and Wall Street would all rather avoid.

Another factor to consider is the potential stain on the reputation of the International Monetary Fund, should Greece or other eurozone countries default. The IMF has extended upwards of $24 billion (U.S.) to the Greek government over the last five years. Considering that the U.S. Treasury plays a big role in the funding of the IMF, U.S. taxpayers would be left holding some of that bag. Ultimately, these losses could lead to waning support by the U.S. taxpayer for future IMF participation.

Apart from our nation’s economic tie-in to the Greek crisis, there is also a more long-term geopolitical risk at play. Recall the Asian financial crisis of the late 1990s, which prompted concerns of a “financial contagion” spreading throughout the globe.

A “contagion” associated with Greece may bear four heads: economic, financial, moral and political. On the economic front, the numbers suggest that Greece, which represents 1.9 percent of the eurozone’s aggregate GDP, may be immaterial.

Financially, foreign investment in both Greek sovereign debt and Greek banks is below that at the height of the crisis. The moral aspect of contagion — the incentive for other countries under financial, economic and political stress to follow in Greece’s steps — appears tempered, given Greece’s recent deal.

On the political front, a disgraced and rejected Greece could seek a greater alliance with the likes of Russia and pro-Russian Balkan states. This scenario sets up a geopolitical shift in the region, which could have decades-long repercussions for U.S. trade and jeopardize regional stability.  

Considering the scenarios above, it shouldn’t take a philosopher or economist to tell us that we should be paying attention to what is happening in Greece and the eurozone.

Tony Braida serves as assistant vice president for global banking at Bankers Trust. With 25-plus years of international sales, marketing and logistics in the private sector, Tony helps small to midsized companies broaden their overseas markets. Apart from his position with Bankers Trust, Tony serves on several local boards with international reach, including the International Traders of Iowa and the Iowa International Center, as well as co-chairing the Greater Des Moines Partnership’s International Council.