At Torcana we always do our best to bring a genuinely open and honest assessment of the investment environment and we position our product range accordingly. In that spirit, I´d like to briefly address an elephant in the corner that most real estate companies would rather avoid speaking about - the affect the current turmoil in Greece could have on the rest of the EU and on our currency, the euro.

Greece is a relatively small and peripheral EU economy that nonetheless faces an economic and political crisis that may have severe repercussions for the EU. Lots of countries have large debts and deficits, but none are as poorly placed as Greece to dig their way out of it. A lack of export prowess, entrenched corruption and tax evasion, an inability to devalue currency and a very hostile public response to necessary cuts in wages and services have all combined to bring this country the brink of default.

Where this will end and how it will affect the Euro exchange rate with other major currencies is anybody’s guess. The worst case scenarios are too difficult to imagine, and the best case scenario is that money being sent from the EU and IMF buys enough time to reschedule Greek debt and proceed with orderly and overdue structural reforms. Several other EU countries (especially Portugal & Spain) also need to convince the markets that they have the ability and determination to implement similar reforms.

Kind Regards

Colin Murphy

Torcana.com

Tags: Currency Crisis, Greek Crisis, Torcana

This entry was posted on Monday, May 10th, 2010 at 7:56 am and is filed under General Opinion. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.