Putting Greece Back Together… or Letting it Fall Apart
This is a podcast summary. For complete details on the items discussed today, please listen to the full audio here.
As we promised yesterday, we’re back today with an update on the European crisis, which is not looking very promising. Greece is on the verge of default, even though most people are not willing to recognize how serious the situation is there. Greece is in the fifth year of a recession and has 20% unemployment.
European Union leaders are asking Greece to follow through on some serious austerity measures – cutting back on public employee pay, pensions, holiday pay and etc. This means a lot more pain to come for the Greek people and we think these measures will also slow the economy in Greece even more.
These problems might soon spread to Portugal and Spain, and as we mentioned last week, the Germans have the power to bail out Greece. However, it looks like Germany has no interest in bailing Greece out, so we expect Greece to default, perhaps as soon as this week. We think that this will have a huge impact on the global economy.
Remember, we’ve said before that our investment strategy is aligned closely with what Mohamed A. El-Erian said in his Wall Street Journal opinion piece a few weeks ago. We are advising that our clients’ portfolios remain “defensive, but agile enough to be offensive when opportunities emerge.”
Tomorrow we’ll look at the final installment of our six-week personal finance series, so come back for more details on how to get your portfolio in shape. (To see the previous five weeks of personal finance tips, look at our blog-post here.)
