US Set to Feel Pain of Greek Financial Crisis
To the four people in this country who still think the United States economy is insulated against economic events like the unraveling of Greece's financial crisis, you're wrong. Like it or not, this is a global economy now, and financial relationships between "us" and "them" are too intertwined to not feel the other's pain when something bad happens.
Let's a take a quick look.
Greece is on the verge of defaulting on loads of governmental debt. There is not doubt about that. The depth and breadth of this particular economic crisis has been detailed at length before. Here's the short version: Greece is in bad shape. No need to review further. The problem is that much of their debt, obviously, is held by major European banks, of which three in France - BNP Paribus, Credit Agricole, and Societe Generale - are on the brink of having their credit rating downgraded by Moody's over exposure to Greek debt.
The French banks claim the Greek default would be manageable, but it's interesting to note that they raise a large part of their working capital by selling debt to the largest US money market funds. Oops. As American banks have begun to enter the global financial field, they find themselves risking exposure to global financial problems as well. If the issue were confined only to Greece then, as the French say, the prospect of a default is probably "manageable," but Portugal, Spain, and Ireland are three more European Union economies poised to follow Greece over the precipice into insolvency.
Speaking of default, wasn't there another country out there faced with a mountain of growing debt? A country where the president must bargain with Congress periodically in order to have the debt ceiling raised so he can borrow more money? Oh yeah, the United States. What investor in his or her right mind would seek security in US dollar denominated financial products now? The answer - a very silly one. Or possibly suicidal.
We'd suggest you quit worrying about the coming economic collapse and which companies listed on the stock exchange are going to survive the implosion. You investment dollars will go much further when directed towards income property investments that prosper in the face of inflation and have intrinsic value completely unrelated to the government's paper currency.
Hear what real estate expert Jason Hartman has to say on the matter in the archives of The Creating Wealth Show.
The Creating Wealth Team
Flickr / archer10 (Dennis)
Tags: debt ceiling, European Union, global economy, Greece financial crisis