This line was recently floated across social media sites: “Greece is collapsing, Iran is getting more aggressive, and Rome is in disarray. Welcome to 450BC!”
Indeed, the similarities are interesting to note. And with the 2012 Olympic Games in London on deck alongside news of Greek austerity rebellion, it’s easy to recall the days of toga robes and laurel leaf crowns, speeches and betrayals.
The Greek government is expected to run out of cash next month if it doesn’t receive more bailout funds. However, the country is revolting over requisite austerity measures in return for the money, so now the biggest question is whether Greece will exit the Euro. But that’s not the worst of it. In addition to the threat of economic collapse and ongoing political instability, there is a break down in infrastructure that may fail to meet basic human needs–such as providing electricity and preventing the spread of infectious diseases. These conditions are bound to continue if not worsen civil unrest within the country.
[CLICK HERE to read the article, "Greece's debt woes mutate into energy crisis" at Reuters, June 1, 2012.]
[CLICK HERE to read the article, "Greece on the breadline: HIV and malaria make a comeback," at The Guardian, March 15 2012.]
Europe on the Brink
Unfortunately, Greece is just part of the problem. Other European countries such as Italy and Spain are not far behind. The number of Spanish companies filing for bankruptcy climbed by 21.5 percent in the first quarter. In Barcelona, the government failed to sell 26 buildings because a bidder wanted a clause that required rents to be paid in dollars should the euro break-up.1
In its twice-yearly global economic outlook, the Organization for Economic Cooperation and Development (OECD) recently cautioned that the 17-country Eurozone risked falling into a severe recession. The organization–which monitors economic trends for the world’s most developed economies–warned that the Eurozone economy could shrink anywhere from 0.1 to 2 percent this year and predicts a mere 0.9 percent growth rate in 2013.
[CLICK HERE to read the article, "The pain in Spain that threatens the Eurozone" at cnn.com, May 31, 2012.]
1 [CLICK HERE to read the article, "Europe in limbo: Home and dry" at Economist.com, May 26, 2012.]
2 [CLICK HERE to read the article, "Eurozone warned 'severe recession' looming," from Associated Press, May 22, 2012.]
In contrast to the Euro blues, the OECD projects the United States to grow 2.4 percent this year and 2.6 percent in 2013. Japan is projected to grow 2 percent in 2012 but just 1.5 percent next year. China is expected to jump from 8.2 percent in 2012 to 9.3 percent in 2013.2
It just goes to show you that there is still credibility in global diversification: Where one area of the world falters, others are on the rise. If you’d like assistance to help you evaluate your financial situation for areas of relative strength, please contact us for a mid-year analysis.
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