Doing The Eurozone Crisis - Greek Style

The Greek elections have been and gone and unfortunately the Eurozone is no further forward than it was before the elections...

The Greek elections have been and gone and unfortunately the Eurozone is no further forward than it was before the elections. Because the political parties involved obviously didn't produce a strong enough case for in or out of the Euro – the end result now appears to be the hokey-cokey process of forming a coalition before getting anything done.

Now the rest of the world has to sit and wait whilst Greece gets on with coalition talks – every day bringing more volatility and turmoil to the world's stock markets, coupled with lots of fancy suggestions on what the Greek government should do from various political bigwigs to take the heat off their own failing economies and existence. 

It could be suggested that this is perhaps the problem with democracy itself with this particular election having hinged almost solely on policies involving the Euro – giving the majority of people the chance to vote on something they don't understand – end result being, no real result at all.

Even once the Greek parliament is established there will still be plenty of talking to be done, possibly more referendums and no-end of other time-wasting and perhaps the odd riot or two materialising as a result.

Reforming the Euro either as I suggested last week or in any other manner, seems to be out of the question for the time being. Although the Greeks apparently have 3 days to get their act together, one has to wonder if that is going to happen. Given the long drawn-out process of getting this far it would seem unlikely.

It all boils down to no-one wanting to make decisions. The powers that be running the EU don't want to, the G20 don't appear to want to, the Greeks don't appear to be able to – in fact the only person who does have any ideas is UK Prime Minister David Cameron and he doesn't have much of a say in matters because of the UK's position in the European Union itself anyway.

When you consider ancient Greece brought the world no end of good ideas, theories, thinkers and sporting events - from people in bathtubs (inspiring the measurement of displacement), to the discovery of a never ending number (enabling the accurate dimensional calculations of all things circular), you would think this situation should have never arisen in the first place.

Sisyphus and Greek Debt

What to do?

This is a tough one – whilst I am a strong subscriber to the methodology of not sitting, watching or waiting when it comes to investing simply because opportunity will pass you by whilst your cash devalues – this particular situation is beyond the control or predictions of the day-to-day investor.

The situation will be resolved, but how long that takes and at what cost really does remain to be seen. I still believe a straight booting-out of Greece from the Euro is unlikely, more a case of take the currency away from them and peg their new one to it for the time being.

Other points to consider are the other bailouts that have already taken place and the future needs of other countries round the corner. If the Greek situation is anything to go by, we could be seeing the longest ever groundhog day on an incredibly large scale. When editing this article this morning I see there are already rumours afoot suggesting a third bailout might be on the cards for Greece.

Hauling all Euro denominated investments into other currencies is a bit of a rash call at the moment, throwing all your cash into Euro based investments likewise. Balance and rationale is the key for the time being – there is no "magic cure-all" investment in situations like these until some sense of direction can be seen. Traditionally one would expect to see the old "flight to gold", but even that isn't looking that favourable at the moment, despite the epic bull-run in the past few years.

Something has to give and it has to give soon to prevent the start and spread of investment anarchy on a mythological scale. Less pontificating and procrastination are the order of the day for those in charge so the investing public can get on with their lives.

- Tuesday 19 June 2012

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