Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

Reasons Why the Greek Crisis Will Only Get Worse

Stock-Markets / Eurozone Debt Crisis Jul 30, 2015 - 04:23 PM GMT

By: Investment_U

Stock-Markets

Sean Brodrick writes: So Europe brought Greece to heel like an unruly dog, eh? And the government of that sad-sack nation got stuck with the same onerous debt terms it was trying to avoid when it held a referendum?

German bankers win, life goes on... right?

Nope.


If anything, the crisis in Greece is only going to get worse. Let me give you three reasons why...

No. 1: The Economic Situation Is Only Getting Worse

Rightly or wrongly, the reason Greece tried to wriggle out of its debt obligations is its economy simply can’t grow the way things are. And sure enough, since Greece was forced to grovel and accept Germany’s terms, Greece’s economy will continue to shrink.

The country’s GDP should contract 0.7% in 2015. That’s down from a 0.8% expansion in 2014, according to most estimates.

3-reasons-why-greek-debt-crisis-will-only-get-worse chart

It will be the seventh annual decline in eight years. Overall, Greece’s economy has shrunk by 25% since 2008.

And the smaller the economy gets, the less of a debt burden it can bear (and the more it depends on European handouts). It’s a vicious cycle that feeds on itself.

Also, remember how shocking Greece’s unemployment rates were, with 25.9% of the general population and more than half of young people out of work? Well, that’s getting worse, too. General unemployment will average 26.3% this year.

No. 2: The Banks Are Still in Trouble

Now that Europe is giving Greece more cash injections, its banks were supposed to unfreeze. People were supposed to be able to get access to their money.

Nope.

In fact, Greek banks, which have basically been frozen for a month, are expected to keep cash controls in place for months to come.

This is worsening the economy (see point No. 1). That’s because banks limit withdrawals to 420 euros a week. That chokes economic activity and borrowers’ ability to repay loans.

Oh, and the Greek stock market, which was also closed for a month, keeps putting off opening up.

Greece owes Europe 300 billion euros. Even the International Monetary Fund says Greece can’t pay that back. Yet Germany shows no signs of allowing debt forgiveness.

To recapitalize and unfreeze the banks would take a back-of-the-envelope injection of another 25 billion euros. So would that be added to the debt that Greece already can’t pay?

Some problems have no solutions.

No. 3: Greece Still Isn’t Bailed Out

The problems that drove Greece into crisis aren’t fixed. The can has been kicked down the road for a bit. The country’s debt is now 170% of GDP. And since the economy is shrinking, the debt-to-GDP ratio is only going to get worse.

Greece is supposed to sit down with its international creditors to talk about a new bailout package. The meetings with officials from the European Commission, European Central Bank and International Monetary Fund were supposed to start last week.

Then the meetings were supposed to start today. Then they were delayed again.

Do you get the feeling that maybe no one wants to have these meetings? Maybe because both sides know that without debt forgiveness, there is no solution to Greece’s economic crisis.

This ongoing Greek tragedy could have many more acts to play out.

To be sure, Greece doesn’t have any real impact on the U.S. It’s even a minor peripheral figure in Europe as a whole. But at the heart of the crisis is whether the euro is a viable currency - does it do more harm than good to weak nations that adopt it?

I think the answer to that question is one that could rock the euro and send ripples through the global financial system.

Regardless, there are several opportunities for investors in Greece. I gave my analysis and favorite picks to play this situation in a recent report. But whatever you do, just be sure to do your own due diligence.

Good investing,

Sean

Source: http://www.investmentu.com/article/detail/46767/3-reasons-why-greek-debt-crisis-will-only-get-worse#.VbpppE3bK0k

http://www.investmentu.com

Copyright © 1999 - 2015 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 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