Greek Elections and Limited Impact

The Greek economy is the 32nd largest in the world as measured by GDP and roughly on par with the state of Maryland.  Even so, the results of Parliamentary elections will be felt, in the short-term, throughout the world.  On the one hand, who really cares if Greece drops the Euro, it might even help as money could be diverted to other, more important economies, like Italy.   But on the other hand, markets hate uncertainty.  Taking the optimistic approach, Greeks will ultimately stay a part of the European Union and will receive help indefinitely in order to stave off a financial collapse.  However, it must be noted once again that unless there are major changes in how Greece does business, nothing will improve.  This is no different from the situation in Spain as I have already addressed in an earlier post.  As we await the results of the elections, the world needs not overreact.  If the results are negative, it will have short lasting effect on markets.  Greece simply doesn’t carry enough weight for it to matter.  In fact, the impact of Greece on the world economy can be compared to pouring salt in the ocean. That of course is my opinion.  Economists, are by nature, negative, so over the next few days, there will be much pessimism.  But either way, markets will open on Monday morning and by Friday will be doing business as usual.

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