European Unity and Global Markets
Reaction by Greek Prime Minister
Greek Prime Minister George Papandreou seemingly took the world back to square one. Papandreou will have a referendum to approve the latest, second, bailout for his country. The agreement signed last week and agreed to by Greece is now up for a referendum.
With that, global markets crumbled. In early trading here the S&P, DAX and FTSE are off and dropping. Bank stocks are leading the way with 10% drops not at all uncommon as the Greek vote calls into question whether or not the entire deal struck last week will need to be renegotiated. What is surprising is that the referendum does not seem to have a date.
Some believe that “The Papandreou decision is kinda smart, who is he to unilaterally commit his country to financial servitude for the next decade or so without the backing of Parliament?” Considering that his government did the bulk of the spending it is a political calculation to refuse to now comply with the Maastricht Treaty which forced other member nations to bail Greece out, again.
The net result is an unexpected sell-off, that could last – ending a rather positive run of data regarding the U.S. economy.
It is time to buy during smaller market growth and then selling each time fear rises. The super committee meets this month – prepare for another period of volatility.
Edi Alvarez, CFP®
BS, BEd, MS