‘Foreign shocks’ could harm US financial stability: Lew

If “all hell breaks loose” you could expect the EU to face serious turmoil and possibly crumble. If Greece can’t make a payment, then Germany can’t get paid. Germany’s Deutsche Bank has $72.8 trillion in derivatives exposure while its GDP is roughly $2.7 trillion.  The contagion would then spread to South America (think Venezuela/Argentina defaults) because of the interconnectedness of investments and would head north all the way up to Mexico for another default. When the wave hits Mexico, America has two weeks before its collapse.

 

Washington (AFP) – US Treasury Secretary Jacob Lew warned Congress on Wednesday that foreign turmoil, such as Greece’s debt crisis, could destabilize the US financial system.

“In today’s globally integrated financial markets, foreign shocks have the potential to disrupt financial stability in the United States,” Lew said in testimony to the House of Representatives financial services committee.

Lew cited political uncertainty in Greece that has added to concerns about stability in the 19-nation eurozone. Greece’s negotiations with its creditors, the European Union and the International Monetary Fund, have bogged down as payment deadlines loom and the risks grow of a debt default and exit from the currency bloc.

“Although there has been some progress during Greece’s ongoing discussions with Europe and the IMF, the negotiations and the path to securing agreement are challenging and complex,” Lew told lawmakers.

“We continue to urge a timely resolution so that Greece is able to continue to meet its obligations,” he said.

Lew, in a phone call on Tuesday with Greek Prime Minister Alexis Tsipras, warned Athens that a failure to reach a deal on financing would immediately create hardship for Greece and “broad uncertainties for Europe and the global economy.”

Full article: ‘Foreign shocks’ could harm US financial stability: Lew (Yahoo!)

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