Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
China's Grand Plan to Take Over the World - 19th Nov 19
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble - 19th Nov 19
Plethora of Potential Financial Crisis Triggers - 19th Nov 19
Trade News Still Relevant? - 19th Nov 19
Comments on Catena Media Q3 Report 2019 - 19th Nov 19
Venezuela’s Hyperinflation Drags On For A Near Record—36 Months - 18th Nov 19
Intellectual Property as the New Guild System - 18th Nov 19
Gold Mining Stocks Q3’ 2019 Fundamentals - 18th Nov 19
The Best Way To Play The Coming Gold Boom - 18th Nov 19
What ECB’s Tiering Means for Gold - 17th Nov 19
DOJ Asked to Examine New Systemic Risk in Gold & Silver Markets - 17th Nov 19
Dow Jones Stock Market Cycle Update and are we there yet? - 17th Nov 19
When the Crude Oil Price Collapses Below $40 What Happens? PART III - 17th Nov 19
If History Repeats, Gold is Headed to $8,000 - 17th Nov 19
All You Need To Know About Cryptocurrency - 17th Nov 19
What happens To The Global Economy If Oil Collapses Below $40 – Part II - 15th Nov 19
America’s Exceptionalism’s Non-intervention Slide to Conquest, Empire - and Socialism - 15th Nov 19
Five Gold Charts to Contemplate as We Prepare for the New Year - 15th Nov 19
Best Gaming CPU Nov 2019 - Budget, Mid and High End PC System Processors - 15th Nov 19
Lend Money Without A Credit Check — Is That Possible? - 15th Nov 19
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19

Market Oracle FREE Newsletter

$4 Billion Golden Oppoerunity

Global Economy is at the Mercy of Tiny Greece?

Economics / Global Debt Crisis Nov 05, 2011 - 03:32 AM GMT

By: Sy_Harding

Economics

Best Financial Markets Analysis ArticleIt’s incredible when you think about it.

Greece is one of the smallest countries and economies in the world. Its population is 11 million people out of the 492 million in the combined European Union countries, and compared to 312 million in the U.S., 1.3 billion in China, 1.2 billion in India.


Its economy is 32nd in size globally, with annual GDP of only $0.3 trillion, compared to $63 trillion for the world as a whole, $16.2 trillion for the combined European Union countries, $14.5 trillion for the U.S., $6 trillion for China, $5.5 trillion for Japan, and so on. Yet for almost two years tiny Greece has had the entire world trembling in fear every few months, world markets in confusion, and world leaders rattled. For the last several weeks the threat from Greece has been a banking and financial crisis in Europe that could throw the entire world into recession, as Greece procrastinates and flip-flops on how it will handle the latest offer to bail it out of its debt crisis. If it were a military threat from such a tiny country, the overwhelming military strength of the rest of the world would make it a joke. But its economic threat has the rest of the world’s overwhelming wealth and economic power helpless to do anything about it? The fear and confusion can be seen in the action of global stock markets. Global markets rallied in the strongest October in years as the latest eurozone rescue and bailout measures were anticipated, and spiked up even further just over a week ago when it was announced that eurozone countries had agreed to the plan. But markets suffered a big two-day plunge on Monday and Tuesday of this week when Greek Prime Minister Papandreou said Greece might back out of the deal, that he wouldn’t be able to decide until he puts the plan to a public referendum in December. On Wednesday and Thursday markets rallied back strongly when rumors hit the wires that Papandreou might be back-tracking on his demand for a public referendum. On Thursday he did back-track, announcing there was no need for the referendum after all. It was a surprisingly fast flip-flop given that he had only proposed the referendum on Monday and as late as Wednesday evening was in Cannes still trying to convince German and French leaders of the need for a referendum. Now going into the weekend, Greece has markets and world leaders back in fear mode. Papandreou has called for the Greek parliament to meet Friday night for a confidence vote on his government, which rules by the slimmest of margins after defections over his handling of the bailout agreement. Experts say if Papandreou does not survive the confidence vote Friday night an early election in Greece would have to be held, which would mean several more weeks of uncertainty that would allow the financial panic to potentially engulf already teetering Italy. All of this as the G-20 major industrial and emerging market countries were ending their summit meeting in Cannes on Friday, where a related drama played out. A major part of the big rescue plan for the eurozone calls for increasing the size of the ESFS rescue fund from 440 billion euros to 1 trillion euros ($1.4 trillion). How that will be accomplished has yet to be worked out. European officials were hoping to use the G-20 summit to convince others to help.   But the meeting ended Friday with no G-20 country committing to contribute to the fund, only agreeing to continue to discuss the possibility. Meanwhile, in recent columns I’ve been saying that if we could only ignore Europe, global economic fears would not be so ominous since indications are that the U.S. economic slowdown has bottomed and a recovery is underway. We received still more evidence of that this week with reports that auto sales were strong in October, 7.5% higher than October of last year. And while Friday’s employment report was that only 80,000 new jobs were created in October, a bit short of the 90,000 that were forecast, the unemployment rate ticked down to 9.0% from 9.1%. And more importantly, there were substantial upward revisions to previous reports. The number of jobs created in September was revised to 158,000 from the previously reported 103,000, and hiring in August was revised up to 104,000 from the previously reported 57,000. It’s another positive to see previous reports being revised up rather than the endless stream of downward revisions to previous reports that dominated the reports during the summer. But unfortunately, markets are back to being hostage to the whims of tiny Greece, and whether its prime minister will survive Friday night’s confidence vote, while world leaders continue to demonstrate a profound inability (or unwillingness) to do anything about the almost two-year old worsening crisis - except to continue to discuss and worry about its increasing threat to their own economies. It’s particularly disturbing to think that Papandreou might have called for the confidence vote only in an attempt to hold onto his job, perhaps thinking the Greek parliament will not vote him out, even though they might want to, if it would mean jeopardizing the debt crisis rescue plan.     

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

© 2011 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules