Obama had a great run of news last week, between the death of Osama Bin Laden and an uptick in economic and employment indicators. But administration officials have a wary eye on Greece, where riots and a general strike are fueling market fears of another debt crisis like the one this time last year that the White House blames in part for slowing down America’s economic recovery. The pictures from Athens are bleak:
In fact, the potential for Greek chaos to spill over and affect the U.S. economy are significantly lower than they were a year ago, thanks to the stabilized global markets and the renewed vigor in America. The major European players have stepped up, and while they still publicly refuse to discuss the increasingly inevitable restructuring of Greek debt, it is clear they can carry the financing cost until they’re willing to do so.
There is still the possibility of a disorderly Greek default, which could then undermine Portugal and Ireland, and potentially Spain, and then spook banks worldwide, creating a new liquidity crisis. Which is why the pictures above make outsiders nervous. But that danger remains remote as Greek and EU leaders are not inclined to play chicken with the crisis.