Why the Greek financial crisis matters to California

Published: Sunday, May. 13, 2012 - 9:36 pm
Last Modified: Monday, Jun. 10, 2013 - 11:07 am

Following mixed election results, Greece's ruling parties have been unable to form a coalition government, raising the probability that the government will default on its massive public debt.

Greece's public debt will soon be equivalent to roughly 170 percent of its gross national product, about 70 percent higher than the U.S. debt ratio. In other words, every cent produced by the Greek economy for about one year and eight months would be needed to pay off the country's public debt.

No one is certain what will happen if Greece defaults on its debt. Some say the European Union could absorb the shock without much damage. Others fear that it would lead to similar defaults in Ireland, Portugal and beyond, throwing the Eurozone into a deep crisis.

The outcome is important to California. Last year, the state exported almost $30 billion worth of goods to Europe, according to the U.S. Department of Commerce. That's roughly twice the size of the state's current budget deficit.

If Greece causes the European Union to slip into recession, demand from Europe for California goods will likely decrease, hurting the state.

This chart shows the value of exports to Europe from California during the last 10 years.

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