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If the Greek government declares default in the near future, it will have a drastic impact on not only the local community but also on the entire EU and US. This will mean no local or international investor will trust the risk free bonds of the government and will result in excessive selling of Euro currency bonds. This fear of default will spread to other already troubled European economies like Spain, Italy, Iceland, Ireland and Portugal. People in those countries will avoid risking the loss of their investment and will immediately try to sell off their bonds.

This will create a huge flow of Euros in the local and international monetary market. The excess supply of Euros combined with the imminent reduced demand for Euros will have an adverse affect on the strength of Euro against the other strong currencies such as US $ and British Pound. It will certainly result in a downward spiral for Euro as it will lose strength against its nearest competitor US $. It is however uncertain whether the quantity of Euros being traded in the market will increase or decrease since that it relative to the extent of increase or decrease in the supply and demand of the Euros.

The trickle-down effect will continue to harm those consumers who buy US goods in the entire EU. As the weakened Euro will be able to purchase only a fraction of what they used to purchase earlier. The demand for US products will fall as the purchasing power of the buyers will be reduced. Giants like Nike, Nestle, Adidas, Dell and others will face tough competition from local producers as their goods will now be cheaper relative to the imported American goods and services. On the other hand, European luxury goods being imported to US will become cheaper for Americans, so a greater demand will be seen for Euro denominated goods in the US and other countries like Japan and England.

The EU country manufacturers will find it hard to cope with increased demand since they are already operating on a limited capacity for luxury items.Another setback will be to financial institutions in the US and Japan holding Euros in their vaults. Since governments and other institutions keep a balance of various currencies in their basket, those that would be holding too many Euros will find themselves at a great disadvantage and would tend to get rid of their excess Euro stock as soon as possible to minimize their loss.

This whole process gives a gloomy outlook of Europe and its developed economies in the next 10 years. People are speculating that this trend will sweep across the whole European continent and continue to the Asian economies. Nevertheless, this is too early a stage to say anything with solid authority. A bailout package has saved US institutions and a similar action could be taken in the case of Greece if the EU stance is to stand united. Although at this point in time, it seems unlikely a complete rescue package is in the pipeline but it sure is to shake the Greek government.

Adjoining EU member countries will face a similar threat and would avoid being engulfed by the same horrible fate. This will give a strong jolt to all the developed economies of the world and force them to think is their growth artificial or real. Hence, the outcome of the Greek debt is being closely monitored by everyone around the world and only something substantial and fail proof can pull Greece out of this mess.