Everywhere you look, there are stories about the financial crisis in Greece. You may be wondering what is going on over there, and why should I care? Today we want to give you a quick synopsis of the problems Greeks are facing and how it can impact your investments.
Greece is currently in danger of defaulting on its loans with the European Central Bank. By defaulting with the ECB, Greek banks’ ability to borrow funds in the future would be in jeopardy. This fear is causing such panic that depositors are withdrawing funds at a rapid pace.
One of the main fears related to this crisis is will it cause Greece to be forced to exit the Euro group? This in turn could weaken the Euro, and cause further financial unrest in Europe. Financial markets have fallen in recent days, and many are nervous about how this will unfold. However, most agree that the direct impact on the U.S. is likely to be small.
In the short term, financial markets are likely to remain volatile. In recent days, U.S. stocks have fallen, although not as much as in Europe. Still, further declines could be expected to cut into consumer confidence and possibly spending.
At the same time, oil prices have retreated again, in part because of expectations that Europe’s trouble will slow demand a bit. Lower energy costs would, on net, be a positive for American consumers, although that may prove to be short-lived.
Another factor to consider is if this crisis could force the Federal Reserve to delay its plans to for an interest rate increase. It is widely expected that the Fed was planning to raise rates in September of this year, but now some economists believe any changes might be delayed until the end of the year.
The crisis in Greece is something that we will continue to hear about and deal with in the investment community for some time, and the news can be confusing at times depending on the source. We would advise you to contact your advisor at Sound Financial Strategies Group to discuss any questions you may have and let us help you understand how these events impact you. Give us a call today!
Investment advisory services offered through Sound Financial Strategies Group, Inc.("SFSG"), a Registered Investment Adviser. Securities offered through Comprehensive Asset Management and Servicing, Inc., ("CAMAS") Member FINRA/SIPC. SFSG and CAMAS are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by CAMAS.
Posted on Fri, July 10, 2015
by Sound Financial Strategies Group