Date: July 13, 2015

Reboot Greece

Since the latest “crisis” in Greece unfolded in the markets almost two weeks ago, I continued to offer that China was the real problem, but Greece was dominating the headlines. Greece doesn’t really matter in the grand scheme of things, economically or market-wise. And even though they struck an absolutely horrific deal for their country, stocks will rally in the short-term because the uncertainty is lifted.

Who in their right mind would agree to more tax hikes, more austerity and more pension cuts in a country spiraling out of control in an ongoing depression? The “deal”, once again, just Band-Aid’s the problem and kicks the can down the road. Greece needs D-E-B-T R-E-L-I-E-F, not more of the same which hasn’t worked since day one.

I have said this for years so you’re probably used to hearing it, but Greece needs to leave the Euro, default on their debt, issue drachmas and reflate without much in the way of imports. In other words, as the cable and PC telephone reps advise, they need to reboot. I keep hearing how Iceland is “different” because they have their currency, but I don’t agree. It’s similar. As bad as it got there, the recovery fromĀ  depression was sharp and steep and the world loaned them money again less than five years later.

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Paul Schatz, President, Heritage Capital