Take a look at this guide on five ways the European debt crisis could affect the United States.

1. Banks fastened at the hip.

At the center of the crisis are the European banks, they have become overextended in debt-ridden countries or even in countries that they ask to help bail them out. Our big banks are tethered at the hip to their banks, says Mark Zandi, chief economist at Moodys Analytics. Theyre all at risk. Theyre all exposed.

The broadest displays arent the most distressed nations sharing the euro, like Greece, Portugal or Ireland. Our banks here in the U.S. have an estimated $700 billion in outstanding loans in Great Britain, which arent exactly affected. There is around $300 billion each in France and Germany, the heads of the Eurozone. They also have about $50 billion each in Italy and Spain, these countries could be pulled into default if the crisis escalates. Yet the nations largest financial institutions have billions of dollars in credit risks in the five most endangered nations of Italy, Portugal, Ireland, Greece and Spain.

Bank of Americas display in the five countries, mentioned above, was $16.7 billion by the end of June. JP Morgan Chases exposure was $14 billion and Citigroups was $13.5 billion which is according to their quarterly filings with the Securities and Exchange Commission. Morgan Stanley, Wells Fargo and Goldman Sachs had exposures of $3 billion to $5 billion. The banks also reported they had tried to shrink their exposure to bad debt by purchasing insurance.

Employees of European banks like UBS and Deutsche Bank might see their jobs in danger if a recession hits the continent and the employers reduce jobs. U.S. banks can additionally tighten credit to small businesses in the U.S. The International Monetary Fund might be asked to assist in recapitalizing the European banks to watch against defaults plus a lot of the IMFs money comes from the U.S.

2. Nations largest trading partner.

Over 20% of all U.S. exports are sent to Europe, which makes them the nations largest trading partner. Around 14% are sent to the 17 Eurozone countries, behind only Canada and Mexico.

Exports to the European Union were $177 billion in the first eight months of 2011, up 15% from last year. The U.S. is running a $65 billion trade deficit with the EU. Germany and Great Britain are without a doubt the largest trading partners. Exporters exposure in the southern peripheral nations at the heart of the crisis isnt as great. Italy imported around $14 billion in services and goods the U.S. in 2011, Spain, $10 billion. The total for Greece: $1 billion. Items sent to Italy went up this year as the financial crisis rekindled. The downward trend in 2008-09 and earlier in the decade, shows the total dropping in exports to Portugal, Italy and Ireland which never exceeded $3 billion a year, according to U.S. Census Bureau statistics.

U.S. businesses worry that financial panic might cause a wide recession throughout the Eurozone, suppressing the desires of French and German consumers and businesses for U.S. products. Standard & Poor feels Europe will deflect a recession and that the U.S. is at serious risk if Europe has a major downturn, said deputy chief economist Beth Ann Borzino. JP Morgan Chase economist Joseph Lupton said that JP Morgan trusts Europe is presently in a new recession, however the U.S. is trending towards in a better direction.

The downside risks are still there, Lupton says, calling attention to next months target date for a congressional panel to advise at least a $1.2 trillion in deficit reduction measure. But I think recession risks have been greatly trimmed after what has been a few weeks of solid data.

Businesses that are exceedingly dependent on European trade consist of transportation, chemicals, electronics and computers. Microsoft, IBM and Hewlett-Packard and the like, are heavily invested, as well as aerospace companies like as Boeing. If aircraft or computers slow in Europe, that can ripple right back into economic activity here, says Kent Hughes, director of the Program on America and the Global Economy at the Woodrow Wilson International Center for Scholars. It could suddenly have a real impact on what we think of as the everyday Main Street.

There are other experts who would say the impact may not be as great. Whether exports to Europe went down by 20%, it would represent 5% of the nations overall exports. Since exports produce about 15% of U.S. gross domestic product, that would mean less than a 1% decline in the economy. However if you are employed for a company that counts on European exports, then clearly youre vulnerable, says Nigel Gault, chief U.S. economist at IHS Global Insight.

3. Companies battening down the hatches.

For the effect of this to be felt by the exporters could take a year or more. But the impact could be very fast for the companies directly invested in Europe. The Eurozone is the largest market for U.S. companies with straight investments. Over half of the market of American-owned foreign affiliates are within Europe. Even now, a lot of companies are sort of battening down the hatches in terms of their capital budgets, Orszag says.

The European situation has been hard on U.S. automakers this year. General Motors hope has all but ended of breaking even in 2011. On Wednesday, Ford Motors reported a third-quarter loss of $306 billion in Europe. Fiat, which owns Chrysler, is also posting shrinkage and is hoping that its U.S. subsidiary can help them in weathering the crisis.

The European market has been dragging everyones balance sheets down, says Rebecca Lindland, research director for IHS Automotive. Ford and General Motors are feeling that just as much as anyone else does. This will make it harder to make a profit to reinvested in American jobs, new models and more efficient factories.

Not as common are the investments U.S. companies have beyond more complex financial arrangements like hedge funds, credit default swaps and insurance. We have to presume that there may be other things hiding in the closet here that we dont know about, says Bruce Stokes, senior trans-Atlantic fellow for economics at the German Marshall Fund of the United States. For that reason foreign investment moves in two positions, one of the most instantaneous cause of a European recession on U.S. workers would be felt at European subsidiaries here, like BMW or UBS. That could be the biggest hit, Gault says.

4. Investors catch a break.

When events in Europe happen global equity markets tend to overreact. There was speculation from Germany and France which sent the Dow Jones industrial average into the black for the year. On Thursday, the latest deal sent it soaring past 12,000. This significantly reduces the chance of financial panic, and thus the risk of a double-dip U.S. recession, says David Wyss, former chief economist of bond-rating agency Standard & Poors and a visiting fellow at Brown University. Even though the markets see that a catastrophe has been avoided, says Uri Dadush, director of international economics at the Carnegie Endowment for International Peace, Ill be very interested to see how long this ebullience lasts.

U.S. money market funds are already moving assets elsewhere. Approximately 19% of prime money market funds assets are currently in Eurozone countries, which is down from around 33% last November. Virtually all lending to banks in Italy and Spain have been eliminated. Experts say, if the situation becomes worse before it gets better, sectors that may take a hit in the stock market include financial, technology, aerospace, defense and commodities.

What to do? A flight to U.S. Treasuries could help, but that will reduce their yields. At the least, risk-averse investors might want to reduce their risk, says Jacob Kirkegaard, senior research fellow at the Peterson Institute. If you believe Europe is going to get a lot worse than it is today, then certainly that is what you should do, he says. That would be the only rational thing to do.

5. Dramatic effect on elections.

Whether average workers and investors in the U.S. were pulled. might the president be far behind? The U.S. financial crisis that preceded Obamas election set the stage for three years of economic volatility. At least in 2009 he took office with a directive from the voters, a Democratic majority in Congress to push through his growth and regulation programs, and four years until his next election.

None of that exists today. This is why Geithner and other administration figures have strongly encouraged European leaders to close the deal reached Thursday morning. European shocks earlier in the year stir markets and create more instability in the United States. All of that means more instability for a president who already says hes the underdog in the 2012 election.

Its very much out of the control of this administration, says Sabina Dewan, director of globalization and international employment at the liberal Center for American Progress. Still, she says, any repercussions from Europes crisis will be perceived to be the fault of the administration, when it is not.

That certainly keeps the pressure on Obama to look for additional guarantees at next weeks meeting of the G-20 leaders in Cannes, France. The key now is to make sure that there is strong follow-up, strong execution of the plans that have been put forward, Obama said. That assumes the U.S. has any clout in the wake of a financial crisis that began here in the first place.

Lecturing from American leaders at this point simply doesnt work, Mallaby of the Council on Foreign Relations warns. We dont have the moral standing to say to people, Listen, guys, we know how to run an economy. Heres how you do it.

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