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Keep calm?

There are interesting things going on in Europe, I hear.

Actually, I think you would have to have been wrapped in a blanket in a pothole on the dark side of Mars to not have heard. For ‘interesting’, I guess you can read ‘bonkers’.

So as we all know Greece is having a continuing spat with its European ‘partners’.  I’d like to have said ‘mates’ because until recently they were all very chummy. I mean perhaps that is the only logical reason why anyone would lend you more than £50bn. Grexit Image

It’s not a tenner is it? Which is why they don’t have the money – it’s gone.  The Greeks have spent all the money on things like state pensions and public sector salaries.

The European Central Bank says it won’t lend any more – ergo enough is enough.

The Greek government and its intriguing leader Alexis Tsipras have called a referendum for this weekend which essentially means if the Greek people vote for “no” more they will probably be out on their ear and can print their own currency.
But it can’t be that simple – I mean, for one thing who is going to pay all the lawyers who will have to unwind the myriad of complex treaties. Standard & Poor’s, the ratings agency, has issued a cheerful litany of grim repercussions if Greece leaves the Euro including: “a serious foreign currency shortage for the private and public sectors which lead to rationing of key imports like fuel.” This is a situation which could have knock-on effects inside the remaining EU, they say.

There is a tendency for us mere mortals to accept as rote statements like this which are issued by VERY CLEVER PEOPLE in the City simply because they are very clever.

Hang on a minute – the Greeks are desperate, they haven’t got enough money to spend what they want to spend anyway, hence the referendum. They argue there is no money from Europe to grow, only patch up, public infrastructure so what’s the point. The Greeks have not got enough in the way of private industry anyway (go on – name some famous Greek brands, bet you can’t) and tax collection there seems rather too voluntary.
The more likely scenario is that the Greeks will just go on, just like they always did, which is how they generated less than 2 per cent of the European economy in the first place.

Yet we Brits sit here, watching “Breaking News”, live, chewing on our nails and seemingly believing there may be some kind of Armageddon if Greece leaves the Eurozone. A friend of mine is a big-shot money broker and he assures me the FX markets have priced in a ‘Grexit’ some time ago. The one they are really worried about is Italy – who you notice have been keeping very quiet over all this. 

It is my friend’s view, and mine, that what the ‘Big Guns’ in Europe are terribly afraid of is that the biggest ramification of a Greek exit is – nothing whatsoever at all. Thus the Portugese, Spanish, Italians will all say – thanks very much we’re off too – leaving the great single currency experiment in tatters.  

That’s why they don’t want Greece to leave. Oh and Mr Putin’s watching and waiting; maybe to “help”.
At the time of writing the FTSE 100 is showing a dip of roughly 400 points from its 7000 peak in the spring, less than 6 per cent. That’s what I call stiff upper lip.

 By Steve McDowell

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