The Euro Crisis has been going on for over a year, and it’s one of those terribly complicated, possibly catastrophic, but not-very-exciting stories that often cause stock markets to plunge.
I’m not an economist, but basically, here’s how it works: Europe used to have lots of different currencies – the German Mark, the French Franc, the Spanish Peso, the Italian Lira, etc. Starting in January 1999, the European Union introduced the “Euro” as the EU’s single shared currency, with the idea that a shared currency would improve trade and develop deeper economic ties and efficiencies between European countries. And yet today, 13 years later, the Euro is threatened with collapse.
A few countries like Greece, Portugal, Italy and Ireland are facing a national debt crisis that they cannot afford to pay off by themselves, so they are turning to the other, wealthier, nations of the EU for bailouts. But these other countries (mainly Germany, which has Europe’s largest economy) are reluctant to foot the bill for what they feel are the excesses and poor decisions of the debtor countries. It’s as if Texas and Florida couldn’t afford to pay their bills, so they asked California for a bailout – and California’s taxpayers refused to pay.
If the Euro crisis doesn’t get resolved in timely and orderly fashion, the world economy could take a big hit that could plunge America’s economy back into recession.
The Euro crisis is yet another example of how our small businesses are often affected by events that are beyond our control. For example, I am a freelance writer based in Des Moines, Iowa, but I have clients in Europe (including London and Germany). Sometimes I have wondered, “What happens if the Euro goes down? Will my clients stop hiring me? Will they no longer be able to afford to pay me?”
If you sell any products online, or sell exports, or sell to European tourists, your business could be impacted directly by the Euro crisis. On a larger level, if the Euro goes down, it could be a huge financial crisis even worse than the U.S. crisis of 2008 – and that one resulted in millions of lost jobs and a deep recession. If the Euro went down, there could be a global stock market collapse that would wipe out millions of people’s retirement savings. The “worst case scenarios” of the Euro crisis are almost more than you can bear to read about.
Obviously, those of us who are running a small business in America cannot make a meaningful difference in the Euro crisis. But one lesson of the Euro Crisis for small businesses is that we all are faced with things that we cannot control. There’s always something bad happening in the world economy. Like many other global crises, you have to ignore the dire headlines and focus on what’s in front of you. Serve your customers. Do your job. Run your business.