Last week it almost looked like Europe might just have stumbled on a solution to its debt crisis. But no—it turned out to be just another head fake in the stumbling battle to save the world from a second global financial crisis.

Now, you don’t have time to study the nuances of the European Financial Stability Fund or the finer points of Greek parliamentary procedures. (You’ve got a business to run!) So here are the five questions—and answers—you should be asking about the debt crisis.

1. I thought the crisis was solved last week. What happened?

You’re right. The financial engineers of Europe kludged together a plan that cheered the markets for a day. But one key pillar of the plan called for Greece to cut government spending further and raise taxes higher than it already had, in return for a break on the amount of debt it had to pay back. Unfortunately, no one apparently had thought to ask the Greeks if they'd play along.

And surprise! Late Monday the Greek Prime Minister announced that Greece would hold a national vote on whether to swallow more austerity or not. And suddenly the best laid plans of financial engineers were subject to the whims of Greek voters.

2. How will they vote?

In opinion polls, more than half of Greek voters say they hate the plan. On the other hand, when faced with a choice between more austerity and a catastrophic default, they might choose to get with the plan. Much depends on how the question is framed. The world has lots of time to think about it: The vote might not take place until January. 

3. What if they vote no?

In that case, Greece won’t get the help it needs to pay its debts and it will default. Greek banks will collapse and the economy will go off a cliff into the winedark sea. Banks that hold Greek debt, a lot of them in France, will be in deep trouble. As will other deeply indebted countries in Europe, most notably Italy, which will have a hard time raising cash from investors who will ask awkward questions like, "If Greece can default, why not Italy?" If Italy, the third largest economy in the Eurozone, goes broke….well, you’ve got a real global financial crisis on your hands. Italy isn’t just too big to fail, it’s too big to bail out.

4. Tough luck for Europe, but I don’t do any business there, so I’m okay right?

You should be fine if all your business is conducted in cowrie shells, krugerrands or barter. But if you need money or banks, or if your customers do, you need to hope Europe holds together. U.S. banks and the U.S. economy are so tightly linked with European banks that if they go, we go. Think back to how your business did in 2008 and 2009. A disorderly default in Greece would usher in a scenario like that, only possibly worse.

5. You journalists! Surely you’re exaggerating.


6. What should I do?

Do what you wished you had done in 2008 and told yourself you would do next time. For example:

  • Don’t take on debt that you couldn’t pay back if business crashed.
  • Don’t keep your cash in a money market fund. They pay a hair more than nothing and they have risks that you don’t have to take. Keep your cash in a federally insured bank or credit union instead.
  • Don’t launch a business or expansion that depends on a) a strong euro; b) generous funding from a European bank; c) avoiding recession in 2012.
  • Root for Mario Draghi. Draghi is the Euro financial pooh-bah who, in an example of horrible career timing, took office as the leader of the European Central Bank yesterday. Many economists say that Europe's best hope is for the ECB to act like the U.S. Federal Reserve and to start buying up the debt of troubled issuers, like Greece. And Italy. And Portugal, Spain, and Ireland. That would assure holders of troubled sovereign debt that there will always be a buyer, and might stave off disaster. At the moment, the ECB isn’t supposed to do that. If Draghi observes that rule, there may not be much left of Europe’s financial system to be central banker of.

7. Is there any silver lining?

Yes. The crisis management in Europe will help distract attention from the super committee deficit debate in Congress, which promises to be as depressing as last summer’s debt ceiling debate. And if you don't mind street riots, Paris, Rome, Athens and Munich could soon be a lot less expensive for American tourists.