Wednesday, November 02, 2011
Greek, other European financial crises (specifically unsustainable pensions) affect value of US retirees' assets
The crisis in Greece affects US retirees. Specifically, the high public pensions in Greece (and other countries in trouble, with low birth rates) affect the value of American’s retirement savings.
That’s because as long as Greece shares the Euro currency, repudiation of its debt would affect the value of savings everywhere. If Greece left the Euro and could have its own currency, which it could devalue, it would then have negligible effect outside its small borders (unlike in ancient times).
The president of Greece wants to put Europe’s bailout plan up for popular referendum. But if the referendum fails, Greece, for a while, would still be part of the Union and dragging down the assets of everyone in the world.
The Greek financial crisis is related in many ways to high pensions, which are about double those in the US. ABC news showed an example of a family where someone in Greece made twice as much in pension as her sister in the US, who would be personally affected by the lack of “shared sacrifice” in Greece itself.