So the Greek bailout has been completed, and the situation is that Greece has actually defaulted. That’s right…Greece has decided to default on some of their obligations while paying back others, meaning that some investors are going to be losing money. This means that many European banks are going to be suffering losses as a direct result of Greece deciding to default on some of its financial obligations. The EU has just entered into a new phase of financial destitution, and investors are going to be taking a long, hard look at what is coming to their economy. There has been talk of setting up a European monetary fund, and this will act like the IMF, bailing out European countries as they fail. The new financial setup being attempted is seen by many as an admission of defeat by the EU.
This partial default mixed with esoteric new economic policies and aspirations directly mirror some of those being attempted in the US. The US debt ceiling talks have resulted in very similar policy proposals and other conditions that have made investors incredibly scared to continue buying bonds. Both Europe and the United States have gone over the edge, and the smoke and mirrors being used to confuse financial markets can only last for so long. This attempt to keep a rosy outlook in the eyes of so much obvious evidence to the contrary is not going to fare well for the USD or the Euro on the online forex exchange. This is a fact that many politicians and economists are very aware of, and this has brought about much of the distrust present in the market.
Until investors can believe in the transparency of the governments who are disclosing financial information these problems are going to continue. No one wants to invest in any company or economy that they cannot trust to disclose all the relevant information where that investment is concerned. It is one thing to sugar coat an investment, it is a completely different matter to make it seem as if things are alright when they are completely out of control. There is no way to know whether or not a government or their claims are honest where an economic outlook is concerned until everything comes to fruition, and by that point it could already be too late. Greece could be just the beginning of a terrible situation turning into an all out catastrophe.
The author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to stay up to date with the latest forex quotes.
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