While investors are finding some solace and showing a modicum of approval in Greece´s plans to cut spending and raise taxes in order to meet their debt payments. The same investors are greedily licking their chops wondering who will be the next to fall victim to mismanagement and future debt default.
There is something tragic in hoping for other´s failures and then buying enough of their country in order to feel obliged to show them the way out of their holes.
Jim Caron of Morgan Stanley remarked, “If the problems of Greece aren’t addressed now, there is a risk the market will focus on the next weakest link in the chain,”, looks like my European vacation might be back on, as each of these countries: Portugal, Spain, and Italy and despite the unbelievable growth of the 90´s to a lesser degree Ireland, could bring the collective European currency, the euro, reeling.
Spain, is the most likely next to fall victim to growing debt and a contracting economy or certainly the one watching what unfolds in Athens as though a trailer for an upcoming summer blockbuster. That is of course if the Spanish people, with an unemployment rate over 20% are still attending the movies.
In addition to the obvious problems caused by mountains of debt, in the case of Spain, nearly 15% of their GDP, is the potential for a restructuring of power in the European Union. France and Germany look poised to be the primary source of relief for not simply Greece, but these aforementioned countries. When France stands set to enjoy extra leverage in Europe it is an annoyance, when German stands ready to enjoy these same powers people get nervous.
Expect the Euro to struggle and to a lesser degree the English Pound as, if human nature as proved nothing else, greed knows no continental loyalties.