The view on Greece as I observe is that the resources of
information are split between those that relish a lose/lose narrative and those
that are unsure, resulting in unclear messages. My view is that Greece is an
anomaly, not a catastrophe, the former providing an excuse for a much needed
correction. That said, consider the pieces of this unsavory pie.
Debt – Greece has a lot of debt. Inability to pay off
debt is a problem but so is the demand by creditors, both international and
national, for more austere measures such as cutbacks in government pension’s
outlays and changes in certain social/employment conditions. The latter common
even to the US as we debate the merits of changing the retirement age or
competing tax philosophies. As of this comment the Greek government has balked
at the demands and creditors are holding their ground, a condition that could result
in Greece exiting the European Union. In the meantime other countries have
suggested temporary aids, including China and Russia. All these are at the
center of uncertainty gripping the region and the global stock markets.
Currency – As a member of the EU a default by Greece
would have a negative effect on the EU currency and its relationship to Asia
and the US. For the US a stronger dollar at a time when the economy is only
modestly growing is, in my opinion, a challenge to our markets although no bigger
than the problems facing Europe. But because the global economies, particularly
in the west, are economically intertwined sympathetic declines in stock markets
cannot be discounted.
External Influences – The now familiar expansion of
aggressions in the Middle East, the launch of the Asian Infrastructure
Investment Bank, a trade and commerce entity to compete with world banks and
outstanding trade agreements. At home Federal Reserve Bank sending mixed
signals as to when interest rates will officially rise. Each of these items
still have a different effect on global growth, in particular the allocation of
resources, but mostly their uncertainty fuels volatility.
So, my focus on Greece is the potential of a default on
its debt and the subsequent result of that outcome (i.e. exit the Euro
Community). However, opportunity is often found in the wreckage of
economic excess, but even without the name calling, nationalistic posturing and
endless political opportunism I remain cautious while on the lookout for it.
And whatever the outcome the global economy will find a way to absorb the
problems that arise, none of which, in my opinion, are as severe as those faced
in the recent global financial crisis.
