The European region and the Euro are both tanking as a result of the unexpected in Greece. This has prompted a severe tank in the stock market.
If you are not up to date on the situation in Greece, the country has defaulted on some of its massive debts. The country has been talking to the IMF about whether or not a financial bailout is in order.
Under the pressure of uncertainty, the Greeks have taken to the streets in protest of the bailout, and the stock markets have tanked with the Euro, which has been in a spiral since November 2009.
According to an AP story, the Dow Jones Industrial dropped two hundred and twenty five points. This decrease was the biggest in months. Then again, the market has not been, in the words of C-3PO, “not entirely stable” for quite some time. It will gain modestly for a few days, and then tank back to the same level it was at the beginning of the process. Then it rinses and repeats.
However, this is a heck of a drop.
Not only was this drop caused by uncertainty with the Euro and with Greece, but by the fact that Ireland and Portugal might be next in line for a bailout. Meanwhile, many Germans and Hollanders are not happy that they are subsidizing Greece’s faulty monetary policies.
Also according to this same AP story, the market is quick to react negatively to such an event, consumer confidence must still be low, saying that “it doesn’t take much to rattle investors who are on alert for anything that could disrupt the economic recovery.”
As I stated in an earlier blog, the precedent of financial bailout is inherently flawed, and will only lead to further bailouts in the region. Look at what happened here. GM received billions of taxpayer dollars, and they are still not on firm footing.
In short, if Greece’s financial system were to fail, it would be a consequence of their own making, and bailouts should only be given conditional upon successful financial reform.