MCHENRY, Ill. — Those worried about the economic future of Greece don’t have much reason to worry, at least right now, since a temporary European bailout was approved for the debt-stricken country. The loan is short-term, however, and not enough to cover Greece’s next debt payment due next month.

The European Union on July 17 approved a short-term loan of 7.16 billion euros (nearly $7.8 billion in U.S. dollars) for Greece, allowing it to make payments to international creditors starting this week. According to a report in The Wall Street Journal, the loan allows Greece to pay the European Central Bank (ECB) 4.2 billion euros due July 20, and cover arrears to the International Monetary Fund of 2 billion euros. The loan will not cover the next payment to the ECB due Aug. 20, giving Greece and its creditors less than a month to negotiate terms of a new three-year bailout of 86 billion euros, something agreed to in principle at a July 13 eurozone summit, according to the Journal.

If Greece were allowed to default on its financial obligations, the ripple effect would hardly be noticeable by growers of grain in the United States – unless that country’s hardships caused the economies of other European countries to spiral downward. That’s the opinion of Frank La Placa, a broker/analyst with Illinois’ Allendale, Inc., a leading financial services firm specializing in agriculture.

Any impact on the U.S. agriculture industry from Greece alone would be from fear in the markets usually generated by future uncertainty, and likely short-term, said La Placa. More important is whether a default by Greece would trigger a domino effect on struggling economies in neighboring countries such as Ireland, Italy, Spain and Portugal or deeper into Europe and the other high-debt countries of Brazil and Argentina.

“That would have a dramatic, dramatic, dramatic impact on the commodity markets,” said La Placa.

Such a scenario would mean fewer countries with money to purchase grain at current pricing levels and the cash those countries now have in the grain markets being pulled out to satisfy creditors. Farmers could also rush to the markets with grain currently in supply to try to get the highest price before the market totally bottoms out, flooding the market even further, he said.

La Placa explained the price reductions from such a collapse would likely reach the magnitude of 2008 when the United States spun into a deep recession and grain prices fell by upwards of 40-50 percent, he said. “Greek default I think in and of itself is almost a non-event; more hype than anything else. It’s the long-term impact if other economies fail because of it. That’s where the risk would hit the farm,” said La Placa.

He said a domino effect from a default would be possible because countries owed money by Greece would have to try to borrow from other countries to meet their debt obligations, and if countries asked for loans don’t have that cash, the economies of the debt-seekers plunge further.

La Placa said the U.S. dollar would become stronger from countries selling off their weaker currency in exchange for more valuable dollars, but on the downside, a strong dollar would mean higher inflation here at home. And, higher prices here would make it more difficult for exporters to compete with the lower prices of goods in countries like Russia.

“It becomes a currency issue, which becomes an export issue, which becomes a fear issue. That’s what I’m saying. This is a huge domino effect,” said La Placa.

Greece appears to be in deep trouble even for the long-term, judging by the International Monetary Fund (IMF) questioning the ability of that country to deliver on its promises under a bailout. The IMF went as far as saying extending the country’s debt for several decades may not even work to regain financial stability.

La Placa said Greece is mainly a tourism country without much manufacturing, making it incapable of earning enough cash to pay off its debts.