Gregory A. Lowe, CFP®
You might be wondering why it is so difficult for a resolution to the Greek debt crisis. When you peel back the layers it comes down to two key issues.
- For Greece, their economy is largely based on tourism and small amount of production of goods and services. As their debt load increases it will become more difficult if not impossible for them to make payments. They are not able to tax their way out of the situation nor are they able to economically grow their way out. Of further concern is that Greece is a net importer of goods (i.e. food, medical supplies, fuel etc.) If they are unable to pay for their imports it would mean great challenges for residents that would most likely require EU intervention. The reality is that the economics of the situation do not make a reasonable solution available to Greece and as a result the situation is unpredictable.
- For the EU, it is not just about Greece. In fact, if it were the situation would be much easier to resolve. However, there are other countries out there with heavy debt loads and larger economies than Greece. Italy, Spain and Portugal are all watching the negotiations with Greece very closely. Should the EU restructure Greece’s debt to a level where they can make payments these other countries may well expect a restructuring of their own. A situation that would be problematic and onerous for stable economies, especially Germany and the ongoing cohesion of the EU itself.
Lowe Wealth Advisors will continue to monitor the developments and keep you apprised of any strategies we deem appropriate. Our expectation of short-term volatility remains intact.
This commentary is intended for the dissemination of general information regarding market conditions to Lowe Wealth Advisors clients. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results, and there is no guarantee that the views and opinions expressed in this report will come to pass. While any general market information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and should not be relied on as such or be the basis for an investment decision. Any opinions expressed are current only as of the time made and are subject to change without notice.