The US will lose its largest trading partner: The United States exports 184 billion euros to the EU and imports 260 billion euros a year in trade. If the euro collapses the Europeans won't be making as much, and Americans will have to buy the products typically made by Europeans elsewhere for higher prices. The European auto and technology industries will be hit hard. I for one am keeping a worried and keen eye on the wine and beer industries, which would suffer in a euro collapse despite the millions of Europeans who will turn to the bottle.
The Fed will act: Central banks in the UK, China, and Europe have already recently engaged in quantitative easing and cut interest rates. Were the euro to collapse, or were Greece to exit the eurozone, the Fed would almost certain engage in some sort of stimulus, further hamstringing the United States' long term economic prospects.
The American taxpayer will be asked to bail out Europe: Were the euro to collapse there would be a huge amount of pressure put on the IMF to plug the resulting hole in international trade. American contributions make up close to 18 percent of the IMF's funds, and American taxpayers would be the ones contributing to a European 'rescue'. It should hardly be of any reassurance that Christine Lagarde, the Managing Director of the IMF, has said that, "I can assure you that the IMF will continue to play its part in supporting the efforts made today to address the challenges facing the euro area and to restore growth to its full potential".
Romney will get elected: A euro collapse will plunge the United States into a more severe economic crisis, and Obama would take much of the blame after Republicans capitalize on the fallout. While free market libertarians might initially relish the President's defeat in November, Romney would almost certainly do nothing different in response to a euro collapse and he would still engage in his moronic trade war with China and his protectionist agenda.
You will be next: What is happening in Europe now is happening in slow motion on this side of the Atlantic. No amount of Fed activism will break the laws of economics. If Americans don't learn quickly from the euro crisis they can look forward to a future of Europeanesque problems and perhaps more frightening, European solutions.
