The Dow Jones Industrial Average has been in the red ten of the past 11 trading days. The explanation that seems to summarize the market mood is: the Greek situation.
Far from considering the European situation with complacency or benevolent negligence, there is no rationale in attaching so much importance to Athens.
That Paul Krugman considers that Greece could leave the euro within a month, or Madame Lagarde, the French IMF Director General, openly evokes the possibility of Greece leaving the Eurozone can only fuel a market sentiment that it is actually possible.
The reality is much more simple: if Greece were to leave the eurozone, the speculation would immediately attack another of the European countries and the Euro would quickly disintegrate. Angela Merkel and Francois Hollande have, wisely and explicitly, excluded that option.
Furthermore, the Greek debt would immediately rise by the amount of the loss of value of the Drachma.
It is time to look at the reality.
Greece represents between two and three percent of the Eurozone, and less than 1 percent of the world GDP. Would we consider that the world is collapsing because California (bigger and more important) would be in financial trouble?
The other reason is because there is no correlation between Greece and the United States. The mutual trade is around $1 billion, with $200 million in favor of Greece.
The problem of the Greek debt has been largely resolved with a decrease of $140 billion forgiven by the private sector.
The United States should focus on its own weaknesses.
The reasons for the deterioration of the U.S. equity markets are primarily domestic.
Yes, companies who are very international like GE are suffering from a decline of their European activities, but GE is more Asian than European. The lack of performance of GE does not date from the Greek crisis, but from the departure of Jack Welch.
The banking sector is weakening, spending so much of its time in lobbying Congress that it even manages to fail, as did JP Morgan for $2 billion, to adequately use the loophole obtained to the detriment of the Volcker rule.
Last but not least, we need to remember that the macho culture of derivative products produced losses at Baring brothers, Societe Generale, Goldman Sachs, UBS and JP Morgan. The top management has been unable to clean that business and amply justifies the rule that it should not be used for proprietary reasons.
Greece is a convenient excuse. Let's correct our own weaknesses, starting from public indebtedness, rather than pointing the finger towards Europe. Our $ 15,000,000,000,000 debt is much more relevant to the world economy and prosperity. We don't need lessons from Krugman, Summers and other economists to know that Europe cannot survive without a combination of fiscal discipline and growth. When the boat is sinking, it is legitimate to first make sure it can float.
Follow Georges Ugeux on Twitter: www.twitter.com/Ugeux
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Start dual/complementary currencies.
You all cheered the fall of the Soviets and the poor Russians were subjected to watching Oligarchs steal Russian assets that should have been used to help the people. The average lifespan of a Russian man went below 50 for the first time since Stalin. And he helped that number by killing millions. What excuse do these bankers have?
Now we have Oligarch bankers who destroy people. And they accuse the Left of Class war, they fired the first shot, and have not stopped their attacks on the working people of the world.
Get rid of Oligarchs and Greece's debt could be handled.
The manner in which the European leaders are acting is another story.
My point is that we should not hide behind Greece.
You should have placed a disclaimer on your piece that you have a personal stake in keeping the banking industries profits up at the expense of the people.
The State of California, which accounts for well over 15% of America's GDP, is in a state of near insolvency, and there is no indication whatsoever that they can grow their way out of it. Yet nobody fears the collapse of the dollar should California default on its debts. At the same time, Greece, which constitutes less than half that share of the EU GDP is said to be capable of bringing the Euro down. Non sequitor!