The world has gotten smaller over the past century. Technology and trade have made nations remarkably dependent on one another. Although the United States has demonstrated resilience in the face of a eurozone fiscal crisis and slowing economic growth in faraway places like China and India, international economic conditions remain a very real and very present threat to the economic health of our nation and our state.

Economist Paul Krugman recently wrote an op-ed in the New York Times where he argued that overall European good exports account for a mere 2.0 percent of the nation’s gross domestic product (that number is approximately 2.4 percent in Nevada). This suggests that America’s (and Nevada’s) trade exposure to Europe is relatively small; however, Krugman carefully qualified his analysis by noting, “exports aren’t the only channel: if European events cause a Lehman-type event, disrupting financial markets world-wide, all bets are off.” Most economists agree that the eurozone is already in recession, but the larger challenge is the potential failure of the euro and the reality that nearly every major European bank holds euro-denominated bonds. In the event of a monetary collapse, those banks would likely be forced to default on monies owed to U.S. institutions, which would almost certainly squelch an already lackluster domestic recovery.

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