Greece Can Kill The Dragon, US

The ongoing debt crisis and lack of resolution in Europe puts the economies of China, Asia and the United States in severe jeopardy.

Much more than the future of Greece rests on the outcome of the current debt crisis surrounding Greece and possibly Portugal and Spain.

With the world becoming more and more interdependent, the International Monetary Fund warned today that a European inspired global recession could lead to a 50% hit in China's GDP.

As the fastest growing economy in the world and the leading consumer of such commodities as steel and cement, a slowdown in China would have vast economic impact on the rest of the world.  As the old saying now goes, “If China gets a cold, the rest of the world gets the flu.”

Major China and Europe ETFs:

iShares FTSE/Xinhua China 25 Index: (NYSEARCA:FXI) starting out the Chinese New Year with a drop of 1.7%.

iShares MSCI Hong Kong ETF: (NYSEARCA:EWH) down 0.9% in mid-day action.

iShares Taiwan ETF: (NYSEARCA:EWT) dropping 1.7% as the island nation doesn't like what it hears from its larger neighbor.

iShares S&P Europe 350 Index ETF: (NYSEARCA:IEV) a prominent ETF tracking Europe's largest companies declines 0.6% as investors worry about the stagnating negotiations over Greece.

China has been basically closed for a week or so for China's New Year, celebrating the Year of the Dragon, but as the fireworks wind down, the celebration could be short lived as the IMF slashed its enviable growth rate projection from 9% to a still respectable 8..2%. However, the dragon could lose another 4% in growth if a global recession triggered by problems in Europe become a reality.

But Europe and its problems could also spread to the United States economy and, particularly, its Industrial Sector and its ETF, Industrial Select SPDR ETF (NYSEARCA:XLI) as major portions of the U.S. economy and corporate profits depend upon Europe.  The European Union is our largest trading partner and generates almost 15% of revenue for the S&P 500 companies.

Bottom line: In many real ways, the future of the world's financial system and most powerful economies rest in the hands of a small island nation with just 11,000,000 people.

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