Greece is becoming a big deal - really. Here's how to get caught up

A nearly impossible story to follow, especially on this side of the pond. Why should we care? Lots of reasons, as laid out in this helpful primer from the NYT:

Q. What's all this talk about ''contagion''? Why is the global economy threatened by a small country like Greece, or a few troubled Spanish banks?

A. If Greece leaves the euro, anyone who is owed money by the Greek government or private individuals there can probably forget about being paid in full. In fact, that has already happened to a lot of Greece's creditors in the debt restructuring completed in March. The next time, if it comes, a lot of the people getting hurt would be European taxpayers, because most of the government debt is owned by the European Central Bank or the European Union. The investment bank UBS estimates the total cost at 225 billion euros, or $286.5 billion.

Commercial banks that have extended loans to Greek clients would also suffer. And some could fail, destabilizing the European financial system, which is already vulnerable enough. Likewise, the failure of several banks in Spain or elsewhere could stick those banks' creditors with losses, perhaps causing more failures, as the problems cascaded through the system. But the biggest effect might be psychological. Investors would begin to worry that the whole common currency union would fall apart. Europe could become toxic to international lenders and investors. Governments and businesses in the region could be cut off from credit, with disastrous effects on the whole economy.

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Q. Now Spain seems to be a big worry. Is Spain just another Greece -- but one with an economy and population more than four times as large?

A. Spain is in better shape than Greece by many measures. But, yes, it's a much bigger country. So its problems could cause much more trouble. Spanish government debt is equal to about 69 percent of gross domestic product. That is far more manageable than in Greece, where the ratio is 165 percent. The gaping issue with Spain, though, is not public debt but private i.o.u.'s. A real estate boom and bust has left Spanish banks burdened with 663 billion euros in property loans. A bank bailout would cost an estimated 200 billion euros, which the government in Madrid could not finance without European help.

Like Greece, Spain has an economy that is not competitive. It is burdened by industry restrictions and labor laws that tend to retard growth. It faces a long restructuring process of its social services and its business markets that will test the fortitude of its people. The real estate collapse has led to thousands of jobless construction workers who must be retrained before the economy can recover. At nearly a quarter of the work force, unemployment in Spain is even worse than in Greece. Among young Spaniards, it tops 50 percent. Economists estimate the cost of a Greek exit from the euro zone at as much as ¤500 billion. The cost of a Spanish collapse would be in the trillions.