Bill Wood, a certified financial planner and a partner at The Advisory Group in Centerville, thinks that whatever damage results from the situation can be contained.
“This is not a tip-of-the-iceberg situation, ” Wood said Monday. “This is sort of a momentary stare-down.”
The problem is not the news, but the resulting uncertainty, he said. This is happening at a time when Chinese stock markets have been down, he noted.
“Markets don’t like uncertainty,” said Wood, who is senior lecturer and program director of Wright State University’s financial services degree program. “(Tell me) Really bad news, and I’ll figure out some way to make money off that. Give me good news, and I’ll figure out how to make money on good news.
“But uncertainties drive markets and investors crazy,” he said. “But that’s probably the hallmark of this issue in Greece.”
Still, future prices in the U.S. Monday were pretty much where they were a week ago, which Wood took as a sign of stability. The Dow Jones Industrial Average, a list of 30 bellwether stocks, fell Monday less than 1 percent.
The questions still to be answered are key, he said. What will Greece’s next steps be? How will France and Germany respond? Will Greece attempt to re-start its own currency? What is its future within the European Union?
The small nation has a “minimal” economic influence on the continent, Wood said. Most of its debt is held by governments and big banks.
“I don’t think there’s anything structural that Greece’s issue is going to present either there or here (the U.S.),” Wood said. “But there is going to be uncertainty.”
The impact from the financial turmoil in Greece will likely be modest because its gross domestic product is smaller than the city of Chicago’s, said Steve Wyatt, retired Miami University financial professor and department chair.
Still, Wyatt said he has been watching the situation carefully. There is potential to harm the U.S, but “only to the extent that it affects the rest of the Europe and the European economy.”
Europe is a major trading partner of the U.S., Wyatt said. As of April 2015, the most recent data available, the U.S. exported $23.6 billion of goods to the European Union while taking in $39.6 billion in imports from the EU, according to the U.S. Census Bureau.
“What happens to the rest of Europe as a result of the first serious breakdown in the European Union — that’s really the thing that could affect us,” Wyatt said.
James Brock, Miami University economics professor, noted the hit against the U.S. stock market early Monday. But he said, “I think our stock market has reacted pretty calmly to this.”
Greece’s “no” vote against another bailout offer from international creditors did not surprise Brock.
“I would have been stunned if they had said, yes, give us more of this punishment,” he said.
Greece may be small, he said, but he cautioned that financial institutions have shown a talent in turning “small problems into galactic rifts.”
Another reason the situation may be having mild impact now is that this situation has been anticipated for some time, Brock said. “One would hope that financial institutions and lenders had already begun to take steps to prepare for this, so it doesn’t come as a bolt from the blue,” he said.
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