A Midwestern economist fears ripple effects from the financial turmoil in Greece will cause trouble in the heartland’s farm economy, but Iowa Senator Chuck Grassley is hopeful there will be minimal impact here.
Voters in Greece will go to the polls on Sunday to weigh in on the latest bailout proposal offered by European creditors. Grassley says Greece is a small country, but the aftershocks could be felt a world away. Grassley says, “I think there’s a feeling it could be a slippery slope that if Greece leaves the Euro, then maybe Portugal, Spain and Italy may follow.”
Just hours before the current European bailout program was to expire on Monday, a new two-year rescue plan was offered for Greece. Grassley notes the news from overseas caused the American stock markets to drop some 350 points on Monday. “There’s a certain amount of uncertainty,” Grassley says, “but I think it’s the uncertainty that’s impacting us through the stock market.”
Grassley, who served for years on the Senate Finance Committee, says actions made by one nation often have a far-reaching impact on other nations. “We do have a global economy and so when somebody in Greece or someplace around the world sneezes, the rest of the world could get a cold,” Grassley says. “I think that’s what you’ve got to worry about.”
Given the situation in Greece, Creighton University economist Ernie Goss says he foresees more people investing in safe havens such as U.S. bonds and if that happens, interest rates — and yields — will drop. “It makes our goods less competitively priced abroad,” Goss says. “It makes agricultural commodity prices less competitive abroad.” Goss predicts a “trickle-down effect” if Greece exits the European Union and quits using the Euro.
Greece becomes the first country to default on a payment to the International Monetary Fund, a payment of $1.6 billion.