Archive for June, 2011

Situation in Greece getting very slippery

Last week the market rallied back over 12,000 as investors got very excited about the plans for the bailout of Greece. The US dollar, the safe harbor of global currencies, was strangely up on this news. The question was “why?” If Greece was going to get bailed out, one would think that it would take the pressure off Greece and the rest of the Euro Zone lending confidence in the region and strengthening those currencies but weakening the dollar as investors would reinvest in Europe and step out of the dollar.

Well, that did not happen. The US Dollar was up on that day and now we know why. Seems that where Germany and the rest of the Euro Zone players had come up with a plan of action……which was greeted by a nice rally on Wall Street……that very quietly, and not immediately, we learned ┬áthe strings that were attached. Seems we found out a few days later…..over the weekend…..that no money would be paid to Greece until Greece put in a very strict austerity plan that most viewing the situation feel will probably not go through.

There are already protests and strikes going on in Greece spawned by the first round of austerity plans which are nowhere near as tough as the ones that are coming. So, the positive outlook brought by the news of a deal is not so positive now that we know what Greece has to do to get the deal executed. This brings about the higher percentage chance that Greece will default. With Portugal, Italy, Spain, and Ireland under watch and warnings from Moody’s, a default in Greece would not only cause damage in Greece but could push these other, tenuous economies over the edge of what is a very slippery slope.