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Monday, 13 February 2012

fundblogiconBy David Cooper, Fund Advisers Europe

At the 11th hour Greek politicians agreed their austerity measures to secure the €130billion needed to pay back the next round of bond repayments.

So, is the Greek problem a thing of the past? Not by any measure.

The austerity measure have hit hard in Greece. 1 in 5 public sector workers have lost their jobs. These are not losses from offices and councils, but losses from areas that affect the whole population. Teachers, nurses, sanitation workers, police and those in administration roles have all lost their jobs.

The measures go deeper still, with a fifth being taken from the minimum wage allowance, it seems that the poorest will be hardest hit.

From a social point of the view the rioting last night was appalling, but in many ways expected.   Tensions have been running high in the country since the depths of the proposed austerity measures were announced.

So what does this mean for Greece and the Euro?

For Greece, it is the start of a long process. Greek politicians admit that the delays in agreeing the measures have hurt the countries reputation and that they have nobody else to blame for the situation, other than themselves and their forebears.

Greece faces a period in the financial wilderness. It must demonstrate a deep seated change in attitude to international finance, and a commitment to long term change within its budgetary systems. Solutions to raise capital for infra-structure projects, urban regeneration or simple day to day running of the country will be difficult to come by.

European ministers, especially the vocal German Finance Minister Wolfgang Schaeuble, have been giving warnings to Greece that the bailouts are not a bottomless pit. There has been a hardening of approach whilst Greece delayed making the austerity measures law, that will take time to overcome, if that is at all possible.

Europe and the Euro members, appear better prepared for any future default. The markets appear to have started to price in a Greek default, meaning the position for the ‘safer’ nations, Germany, France, Luxembourg etc, is far safer today than it was on Friday.

Europe still has a distance to travel before it can see itself clear of the Sovereign Debt crisis, and the Euro still poses problems on the currency markets, trading still at very high levels on the back of continued support from China to keep their export costs low.

It will be interesting to see how the markets react to the Greek deal? Our opinion is summed up with the words “be cautious”!

Fund Advisers Europe
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1206 Geneva
022 347 00 52
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Author Bio

davidcooperDavid Cooper is a Director of Fund Advisers Europe, a Financial Services company offering a  broad range of Investment and Insurance Services to clients across Europe and Latin America.  The majority of David’s early experience was gained by working for Lloyds Bank in the United Kingdom. David now has over 20 years' experience growing wealth management brokerages throughout Europe, the Caribbean and Latin America. The primary objective of his role at Fund Advisers is the creation of growth in Fund Advisers’ Wealth Management & Discretionary Fund Management division. David lives in Geneva with his family.

Check out the Guest Blogs section of knowitall.ch and select David Cooper under Work/Business to view his blog!