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Exploring the Implications of a Greek Collapse

It’s now July of 2015, and still Europe and the rest of the world waits on edge as Greece’s economic saga continues to unfold. All winter and spring, Greek and its European Union lenders engaged in terse bailout negotiations, with Greece facing multiple threats of financial collapse. While negotiations are ongoing, it seems that the situation has finally reached a point of no return. As of June 29, Greek citizens can withdraw just 60 euros, or 66 dollars, per day from Greek banks; it’s estimated that by July 13, Greek banks will officially run out of money.  Greece’s lack of money has finally become a tangible reality for Greeks, and the government and EU are now forced to find a way to move forward, or have Greece abandon the euro and membership in the Eurozone altogether.

Greek’s economic peril has many around the world, like financial expert Dawn J Bennett and Forbes columnist Chris Versace, watching closely and wondering: Will Greece leave the euro, and if so, what does will it mean for us?

According to Versace, who recently sat down with Bennett on her nationally-syndicated talk show, “Financial Myth Busting with Dawn Bennett”, it’s more likely that Greece will agree to stay with the euro than return to the drachma. It’s what a seeming majority of Greeks favor, and by returning to the drachma, a host of uncertainties are introduced. Of course, members of the Eurozone, particularly heavy-hitter Angela Merkel of Germany, may be unwilling to negotiate and could outright cut Greece from the Eurozone rather than commit to another bailout. Greece’s inability to reform its pension system, eliminate corruption, and collect taxes have long frustrated Germans and other Eurozone members; if Greece can’t reform from the inside, why should other countries continue to offer financial aid?

The issue is complex, to be sure. Regardless of whether Greece rightly or wrongly leaves the Eurozone, Versace argues that a potential “Grexit” won’t have a significant impact on the U.S. economy or investors. Why?

  • The Eurozone is comprised of nearly 20 other countries, many of which maintain strong, burgeoning economies. Greece is an important economic member of the group, but its absence won’t be catastrophic, and will actually relieve lender nations the burden of future bailouts. Without too much shakeup in the Eurozone, the U.S. has little to worry about.
  • Though a Grexit will probably hurt the U.S. stock market in the short term, it will actually provide investors the opportunity to purchase stocks at lower prices or increase existing investments.
  • The European Central Bank’s 2015 stimulus program is good news for investors around the world, and will help counteract any potential negative consequences of a Grexit. This $3.1 trillion program is already helping to grow the Eurozone economy and will serve as a stabilizing force for U.S. investors.

Thus, while the economic future of Greece may be uncertain, that of the U.S. is not (as much). We have a host of our own economic challenges to worry about to be sure, but a Grexit won’t be an added reason for concern.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com