Thursday 31 December 2015

MR. MARKET

by: MisS VictoriA DaviD

The 'market' (bond, commodity, stock, FX, etc.) in general, is like a supernatural entity and it can bring down the Governments. For example, the USSR (Union of Soviet Socialist Republics) came crashing down and adapted capitalism from the ruins of the old system. Recently, the Argentine middle classes lost there 'shirt' as the value of the peso crashed, due to Government debt.


At the moment, why there is a Greece crisis it is because they cannot afford to pay the interest of the bond debts. The money every three months become due. The recent turmoil has been caused because successive Governments had borrowed too much and can't afford the interest on the loans. These loans are called bond that are traded in the market. As Greece didn't have the money to pay the interest on their bonds they had to ask the EEC (European Economic Community) and the IMF (International Monetary Fund) to rescue them. That is the historic debts!

Any new borrowing by Greece is now price at 15% per annum. This is much more than the country earns, so, there is no way to pay without going bankrupt. This is the cost of the crisis that the market will bring to the door of any 'Govt.' or 'person' who ignores it.

Don't be surprised if the Euro or Sterling drops in value because Greece problems are endemic in many European countries.

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