Are We Greece?

Those of you who monitor the stock market know that over the last two years the Dow Jones and the NASDAQ have been on a roller coaster ride,  too often headed on a downward slide. While most of the problems with the market have been responses to the dismal economy and frequent news about joblessness, trade deficits, corporate earnings, the value of the dollar and oil prices, there have also been concerns expressed on the trading floor over the deteriorating economic conditions in Europe.

Countries like Greece, Spain, Ireland, Portugal and now Italy are all in a bind, as a result of enormous debt accumulated because of poor government management, generous entitlement programs and of course the tough economic times.

The reaction of the US stock and bond markets shows just how the world financial system is now interconnected and how what happens in Greece has a definite impact on our portfolio holdings and retirement accounts.

Many financial experts are quite concerned about the European countries and their economic problems as a default by Greece of the other countries could trigger another worldwide recession.

The countries of Europe that are in better shape such as Germany have stepped forward and poured billions of euros into the faletering countries in order to stabilize the financial situation, but the problems seems to be getting worse as news of more debt keep propping up.

The other side of this debt problem is that assistance to the weaker economies comes with conditions, which usually mean higher taxes, fewer benefits and more unemployment. Needless to say, the fiscal austerity measures are causing protests and violence as the people of Greece ( soon to be joined by the others) are taking to the streets to say that they will not tolerate drastic changes in their lifestyle or their future financial security.

All this financial and social turmoil raises the question, is the US headed in the direction of Greece? Can we sustain over $ 14 trillion in debt and perhaps even more importantly, will the American people accept crushing changes to entitlements, taxes and employment opportunities.

While Greece has been engulfed in this financial crisis for months, we are just beginning our journey into austerity. We would like to consider ourselves not on the same level as Greece, but a year ago Greece didn’t see the crisis coming and put off action while it piled up debt.

Are we Greece? The next weeks and months will likely provide the answer.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: