PhotoIf you happen to be a consumer living in Greece, you probably spend a lot of time wondering what a default by the government on its massive debt means to you. If you're a U.S. consumer, probably not so much.

In Greece, consumers have been lining up at ATMs to get cash out of the bank while the government and the rest of the European Union try to reach some kind of terms.

In case you haven't been following the Greek drama, the country has been teetering for months, finding it increasingly difficult to repay the bondholders who have been lending the government money for years.


Creditors have demanded the Greek government cut social programs and live more within its means as a condition for further aid. But in the last election, Greek voters elected a government that pledged not to give in to demands for austerity. So a standoff has ensued.

If Greece ends up stiffing its bond holders, it will almost certainly leave the EU and stop using the euro. For Europe, and especially for Greece, things will be fairly chaotic for a while.

But what about in the U.S.? What will a Greek default mean here? No one really knows for sure.


While it is known that Greece owes billions in debt, it isn't precisely known to whom it owes the money. When it comes to markets and economies, uncertainty is a dangerous thing.

U.S. Treasury Secretary Jack Lew was before the House Financial Services Committee Wednesday, warning lawmakers that a Greek default could destabilize the U.S. financial system. That kind of warning hasn't been heard in Washington since 2008, when the subprime mortgage collapse threatened to bring down the banking system.

Lew told lawmakers Americans shouldn't be complacent about what is happening half-way round the world.

"In today's globally integrated financial markets, foreign shocks have the potential to disrupt financial stability in the United States," Lew told lawmakers.

Ripple effect

Unfortunately, U.S. banks don't have to hold Greek debt in order to be affected. U.S. banks could hold European bank debt and it could be the European banks that hold the Greek bonds. If that is the case, the ripple effect would surely reach American shores.

There are only two weeks left to work out a deal between the Greek government and its extensive list of creditors. After that the International Monetary Fund bailout program expires and Greece will be essentially broke.

CNBC “Mad Money” host Jim Cramer thinks the U.S. stock market would take a one- or two-day hit in the event of a Greek default, but the real impact, he says, will fall in Europe.

Crammer says the European Central Bank may have to step up with new massive amouns of aid, just to keep Greece from starving and its population fleeing to other European nations, placing a massive burden on those countries' resources.

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