How Does Greece’s Money Problems Affect US?

1628271-1424185220617286-AlphaIdeasIt seems like every day I come to the office and look at the news there is a story about Greece and how it is affecting our markets. With an economy only 1.4% the size of the United States, how does Greece obtain so much interest? Today I want to illustrate three reasons why tiny Greece has become so important in market news lately.

The first reason why Greece’s financial woes are affecting world markets (including U.S. markets) is because of fractional reserve banking.  Most of the world’s financial systems operate using fractional reserve banking. This is a complex system where central banks actually create money out of thin air.  For example, If you were to deposit $100,000 into your local bank, through fractional reserve banking,  potentially $900,000 of new money could be lent out to borrowers. If the bankers were to loan this new $900,000 out to borrowers who don’t pay back the loans, the prudent depositor would be justifiably concerned about his $100,000 deposit.  Similarly, this is what has happened throughout the European banking community. Millions of European citizens have made deposits into European banks, and the banks lent some of those funds created through fractional reserve banking to Greece. If Greece doesn’t pay back their loans, it can have a catastrophic cascading effect on the safety of millions of European deposits.

While Greece isn’t alone in having a national debt problem, their situation appears to be worse  than most other western 1200x630_298422_greece-peaceful-anti-austerity-rally-icountries. With an annual economic output of approximately $238 billion, the Greek government owes over $360 billion to various lenders, such as the International Monetary Fund (IMF), The European Central Bank (ECB), the European Financial Stability Facility (EFSF), and various other European financial institutions. Since the global financial crisis of 2008, Greece has been pressured by its many lenders to adopt austerity programs, which is a fancy term for:  “Stop spending more than you collect in taxes!” The lenders want to get paid, so they are demanding Greece reduce its public spending and raise taxes on their citizens. The Greek government is arguing that prolonged austerity will lead to a reduction in  their economic output making tax collection more difficult. The citizens of Greece have been less than enthusiastic about reductions to their government pension checks or liberal social entitlements, and being a social democracy, they are voting accordingly. As a result, Greece has threatened to default on its loans. If they do, it will have a catastrophic cascading effect on the integrity of the European banking system.


The second reason why Greece is so important is there is little consensus on how Greece should be treated if they default on their loans. If they are treated with kid gloves, other countries (such as Italy, Spain, and Portugal) operating under similar lender imposed austerity programs, may choose to default as well.  While the European banking system might be able to absorb Greece’s default, it might not be able to absorb multiple defaults by nations whose citizens have grown weary of living under austerity. The final concern of a Greek default is the strengthening of the U.S. dollar relative to the euro. As investors and governments continue to lose faith in the Euro out of fear of a Greek default, they have been flocking to buy U.S. dollars. When the demand for U.S. dollars increases, so does its price in currency exchanges. While a strong dollar is good for tourists vacationing in Europe, it is horrible for any American company that wants to sell their goods and services there. All other things being equal, American companies will find their prices less competitive in Europe if the dollar continues to get stronger relative to the euro. If American companies see a decline in their exports to Europe they will experience lower profits and declining stock prices.
Investment markets hate uncertainty, and the actual impact of a Greek default is difficult to predict. Whenever markets experience uncertainty they tend to react with pessimism.  In the short-term, Greece’s financial problems could have a negative effect on U.S. stock prices; however, history has shown that individuals and nations rarely focus their attentions on fixing small problems until they become big ones, and it isn’t usually until big problems become crises that we actually demonstrate the resolve necessary to implement distasteful solutions.  Therefore, a Greek default might actually be the catalyst for long-term positive change in central banking protocols.

True and Proper Worship

Therefore, I urge you, brothers and sisters, in view of God’s mercy, to offer your bodies as a living sacrifice, holy and pleasing to God—this is your true and proper worship.~ Romans 12:1

pg-worship-570x194When it comes to worship, churchgoers love to talk about the who, when, where, and what of worship, but do we really know HOW God wants us to worship?

When the occasion arises that we are in search of a new church to attend, we often focus on the experience of worship. Was the music jazzy enough? Did we find peace in the process? Did other members welcome us? How long did it take for communion? Did the congregation say the correct version of the Lord’s Prayer?

When we invite our non-member friends to worship we often refer to how we feel after a service or how great the sermon was or what beautiful songs the choir performs. While these are all integral parts of our Sabbath Day experiences, these acts are not what the Lord our God had in mind when He calls us to worship Him.

If we relegate our worship to the experience we have on Sunday morning, we are going against what Paul advised his followers in Romans 8:7 (The mind governed by the flesh is hostile to God; it does not submit to God’s law, nor can it do so. ) By placing our worship experience in church first, have taken a very self-absorbed approach to worshipping God. We have lost sight of what the act of worship is all about.

God wants us to worship Him in all that we do. “Take your everyday, ordinary life—your sleeping, eating, going-to-work, and walking-around life—and place it before God as an offering.”   Rom. 12:1a MSG.  He wants our lives to be lived to His glory so that all that we do is an act of worship before him. That means, when you are at your desk on Monday morning do your work with the spirit of God leading you; when you go to lunch carry the grace of God to your server; when you walk your dog tender His love on the least of these; when you pick your child up from school thank Him for this precious precocious one. That is how God wants us to worship Him.  We have different gifts, according to the grace given to each of us. (Romans 12:6) Use them for His glory. Worship Him by using them well.