Effects of Euro Zone Crisis on U.S.

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Effects of Euro Zone Crisis on U.S.

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Introduction

• The euro zone crisis affected all economies
  across the globe and the U.S.
• It is ranked among the strongest economies in the
  world .
• All the 17 euro region counties comprised
  seventeen percent of the worlds economy.
• They generate 12.2 trillion in gross domestic
  product in 2012.

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Discussion

• The economy of Germany is the 4th largest
  globally .
• It has a strong financial ties ,trade and
  investment with the US .
• When there is shock experienced in one region,
  the effects it has on the other are important.
• The European crisis directly affected trade in
  the U.S.
• The demand for goods from the US went down
  because of reduced incomes.

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• The euro zone is the 3rd largest United States
  export destination accounting .
• This is for at least 15 of its good exports as
  well as one third of its service exports.
• The United States is tied to the global economy
  in numerous ways.
• This is for instance through exchange rates,
  interest rates, credit spreads, bank borrowing
  costs and trade.

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Effects to the U.S.

• The crisis affects the U.S. as well and in more
  than one way.
• U.S. banks are global and most of them have
  operations in European countries.
• Everything would be placed on a balance sheet and
  this would raise the risk the country faces.

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Outcomes Experienced

• Bank capitals would increase.
• Credit spreads would increase.
• Assets on balance bank sheets would also lose
  their value.
• Greek exit would cause serious repercussions in
  the U.S above and over any form of direct
  exposure.
• The mortgage rates in the U.S. have always been
  low .
• This is because of the Feds policy aimed at
  keeping them low.

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• The crisis also affected the mortgage industry.
• This is because most of the deals available are
  under conservatorship arrangement with the
  government.
• This weakens euro and a strengthening dollar has
  on the U.S.
• This affects flight safety.
• The positive effect and this is the country
  remains a safe haven for a large number of
  investors.

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Effects of Euro Zone Crisis on U.S.

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