Okay, so the government of Greece cannot pay back the money it borrowed from banks, mainly German banks. Or can it? Or perhaps the better question is, will it?
If that question has an answer, will the answer have any effect on the U.S. stock market?
Answer: yes and no. Yesterday and the day before that, analysts blamed the Greek financial crisis for the decline in the stock market. Today, the market closed up. What happened to the GFC? Earlier, analysts said market moves were due to various financial reports: building permits, housing sales, unemployment figures. Hmmm.
IFO had been in the process of writing a post on why you, dear readers, should ignore the movement in the market and why the GFC was absolutely not important to US stock movements, even though the current trend does appear to be down.
She was also going to warn you that she is almost ALWAYS wrong in her predictions about market trends. That’s why she ignores her own opinion on the topic.
She’s still going to comment, but now primarily to say that you should stick to your own investing style – concentrate on the individual stocks you own, company management and the business climate for those stocks.
For example, do you own stock in a company that sells product to the Greek government? Why???? If you do, it would probably be a good idea to look for another company to invest in.
And don’t look for a company that sells to any government – a most unreliable customer, subject to public moods, political whims, and changes in control with little to no warning.
Sure they have the power to tax to pay their bills – if they can find where the citizens have hidden their money/wealth. In family-oriented countries like Greece, the “wealth” is often non-monetary. Families stick together and give non-monetary support to their kin. And the Greek bureaucrats also have family.
This non-banking economy, by the way, is why governments hate check-cashing companies, pay-day loan companies, holes in the back yard, mattresses and other non-bank places of wealth storage. Credit card companies also hate those entities because every person taking advantage of those storage spots is a lost profit opportunity.