I talked to my 85-year-old mother every morning.

Usually we chat about little things, the weather, local news, retail sales in the stores and what we're doing for the day.

This morning, however, Mom asked me why the headlines in the papers were all focused on Greece and the EU.

She couldn't understand why THAT was the lead story here in the US.

That got me thinking that if she doesn't understand the significance, then maybe some of you don't, as well.

So...thank (or blame) my mother for the following!

Although the possibility of a Greek default is first and foremost a problem for the European Union, it IS a US banking problem, too.

Banks in Europe support the EU member governments by buying members' government bonds.

But, Europe also needs US dollars for purposes of trade, so our Federal Reserve engages in currency swaps with the EU Central Bank to facilitate trade, sending dollars to Europe and accepting euros in return.

The ECB promises to repay the Fed in dollars and with interest on the loan.

U.S. banks also are involved in these funding operations because  they engage in issuing insurance against the possibility of EU sovereign debt defaults through credit default swaps.

If Greece does default, U.S. banks will have to pay on these "insurance policies" that they have issued.

These credit default swaps are the SAME class of securities that helped bring down Lehman Brothers just a few years ago!!

As for our Federal Reserve that is sitting on euros with a "promise" of repayment with interest...the Euro zone governments are tapped out and unable to meet the financial demands of too many social programs, a shrinking number of taxpayers and too many guarantees to European banks that have continued to buy the bonds of governments like Greece, Ireland, Portugal, Italy and Spain on the word that no country will default.

So, if the EU can't repay the dollars to the Fed, you and I are going to be left holding the bag, just as we were with the last bank bail outs because...who, in the end, is always the source of bail out $$$$?

US, the taxpayers!

Understand, Mom?