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What Is The Impact Of Greek's Referendum On The Global Economy?

, 3rd November 2011 at 12:27 AM (277 Views)

The Greek referendum is coming up and people are expecting the bailout to be voted down. What will that do to the global economy as a whole. What about the Euro-zone? Do you think this will create a precedent for other Euro-zone members that are also in trouble?

My opinion---Greek is not a big Euro-zone market. However, the bailout getting voted down by Greece will definitely show how fragile and weak the Euro economy can become. It will hit the stock market hard in the near term. However, the long-term economic impact of the Greek referendum is almost nil as global exposure to Greek's default is relatively small.

What really matters is that the real estate market starts picking up in those countries that experienced the real estate bubble burst. Secondly, credit needs to loosen up so that small businesses can borrow to grow their business, and thereby hiring more.

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Updated 9th November 2011 at 04:44 AM by realestatehowto

Tags: bailout, economy, greek

Categories: Uncategorized

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Comments

Gav - 3rd November 2011 07:22 AM
I personally think people have to get hold of their own spending, get their debts down to soften any further blows if the economy gets worse, here's hoping it doesn't, I'm in Australia at the moment and their strong dollar and the increase in materials is scaring a lot of them. They've ridden high on the boom for commodities and not really put it back into infrastructure, instead borrowed against it to buy (or extend) bigger houses. Not a great way to use that sort of cash. In put into a better rail network, internet service systems, renewable energy and more on schooling would have been a greater use of the money in Oz.

As for Europe. If the referendum goes badly in Greece I'd expect inflation beyond what they'd get taking the package, massive job cuts, much longer times before retirement. it'd be a big mistake not to take it, but it's a tough one!

For house prices in Europe to rise again (I'm currently trying to sell one and dropped it £10,000 yesterday!) people's incomes have to come a long way up! Over here in Oz friends that work as managers in a store comparable to Tesco or ASDA (Coles) earn about £75,000 and house prices in their local area are about £250,000. Compare that to friends in Edinburgh for a Tesco/ASDA section manager job £30,000 and same amount of rooms but slightly worse house (smaller rooms and smaller backyard, no garage) would cost about £300,000 to £350,000. So already instead of being 3.5 x Annual salary we're looking at 10 times average salary in the Edinburgh!

So either house prices have a long way to drop in the UK or pay increases need to happen fast. OR there's going to be a giant boom in house prices here in Australia.
realestatehowto - 9th November 2011 04:50 AM
Yeah I agree. Probably see inflation almost to levels of the Weimer Republic if they drop out of the EU and there is no foreign help. Heh, the vote didn't happen after all
Gav - 11th November 2011 07:32 PM
So what do you think will happen next?
Gav - 12th November 2011 02:33 PM
this is an interesting post:
VIDEO: How might eurozone debt hurt UK?
realestatehowto - 18th November 2011 09:38 PM
I think Germany, being the biggest beneficiary (and symbolic leader) of the EU, will do almost everything in its power to hold the EU together. However, they might make an example of one or two smaller countries, just like the Feds did here in the states with Lehman Brothers and Bear Stearns at the climax of the banking crisis. There is always going to be opposing interests when it comes to the EU though as it IS indeed an international currency. Keeping the Euro-Zone out of economic danger is a little tougher than it was in the US though, I think. With multiple nations at the table, you will have a harder time resolving anything.
realestatehowto - 18th November 2011 09:43 PM
btw, us banks have been taking a beating since Fitch said that banks in the states are overexposed to the EU debt market. There goes my stocks
realestatehowto - 18th November 2011 09:44 PM
How big are the houses that are listed at 250,000?
Gav - 19th November 2011 10:51 AM
One of the real big problems with the Eurozone is that Italy is failing and it's the 3rd biggest economy in the Euro! Now that's not good, sure Germany being the biggest exporter in the world is doing well, but it can't hold up all these other countries and still let it's own population have a good standard of living. However they have been trying to give their citizens a break from paying for bad governing bodies of other countries: German tax cut row worsens ahead of EU summit - Yahoo! News

Strangely the UK are having problems with banks going the other way, HSBC has warned it was too exposed to the US housing market and is expecting losses. can't find the one I was looking for from 2 to 3 weeks ago (probably read it in the paper) Warning as HSBC profits fall 28%

A month ago I would have said to invest in Australian shares, but now that China's slowing it's production and need for raw materials from Australia are going down things aren't looking so rosy. Their dollar had got up to $1.07US and is now down to $1 for $1 and I think will continue to slide.

As for the houses in Oz they'd be a 3 to 4 bed house on a 1/4 acre within a 10 minute drive to the beach.

France maybe an option, they're very strict on their mortgage lending, you even have to take a physical before they will offer the cash up, so they didn't have the major bust that other countries experienced.