How Elections in France, Greece Can Affect Your 401(k)

Photodisc/Thinkstock(NEW YORK) -- Voters in Greece and France went to the polls and sent the same message, punishing leaders who pushed through austerity plans -- drastic cuts aimed at saving Europe's economy.  

Why should the U.S. care about rejected austerity measures in Europe?  Economists say it could have an effect on your 401(k).  

Much of Greece's debt, for example, is financed by the major French banks.  The French banks are insured by American banks.  So if the banking system in Europe cracks, says Art Cashin of UBS Financial Services, 401(k)s in the U.S. will be dragged down with it.

"Money flows like water and if a dam breaks someplace, that could flood your home," Cashin told ABC News.

But the results of the rejection of these austerity plans may not be all bad.  According to a Wall Street Journal report, some analysts say voters' rejection of austerity in France and Greece could boost the global economy if governments feel pushed to do more in stimulating economic growth, rather than enforce stiff budget cuts.

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