We all know that when it comes to the political landscape of the world, Greece is a large reason for the sudden spike in the EUR/USD price and also for the overall price appreciation of other bonds in the U.S. As for now, the Greek debt deal has gone down on paper but may not stay that way in practice.
Now, as soon as Greece agrees to a deal with the Troika, the people of Greece should be able to see some positive changes. In fact, that may actually be the first real positive news in Europe in many years. After all, the politicians all over Europe were getting frustrated and wanting to just tear up the Euro.
However, once the Greeks came to the negotiating table and essentially agreed to the terms of the EU had agreed to, and also agreed to the current bailout package, then they were in a very good position to continue moving forward in negotiations. The new demands were very reasonable and they could have easily met them had they wanted to. Therefore, the EU stepped in and gave the Greeks some ammunition to fight with.
Now, as the deal is becoming more stable, and the EU will continue to back the Greek government, but this time, they will be able to get something for nothing, and the people of Greece will start to see real gains for their economy. At the same time, the credit market will be coming back stronger than ever and the euro will begin to return to its strength.
Indeed, when the Greek government feels like they are in a strong position, they can make their move, and they will eventually succeed in getting their debt lowered. But until that time, the European Union will allow the Greek government to continue to stick its neck out to prove to everyone that they do have the power to make change happen in Europe. Once that is over, the euro will start to grow again.
Of course, the Greeks are not going to stand for the austerity measures and the decrease in taxes imposed by the Troika, so there will be an economic crisis in Greece and then sooner or later, this is going to spill over into other Eurozone countries. Then we will be in trouble because one day, other countries will want to devalue their currency to make things even harder for us. The U.S. and other nations will feel the financial pinch as well, and all of it will slow down the global economy.
One key advantage for us is that we can resume the free flow of capital between the United States and the other countries of the world. But we need to slow down the pace of selling assets, especially to the European countries that are doing so poorly. We need to put some money back in our own pockets.
Also, we need to get out of the stock market, which is currently trading at record highs, and look for any stock we can sell off and buy a lower priced bond. We can even sell the stock market, but when we go to sell it, we need to look at selling assets that are actually under value. We need to get those assets priced back up.
Indeed, we have been overvalued for years and now it is time to overvalue the U.S. dollar, which is exactly what the Troika is doing with the European debt talks. Yes, they can win the battle in the short run, but they will lose the war in the long run.
The good news is that in order to win this war, we need to be patient. Right now, you cannot buy a home, you cannot buy a car, you cannot go on a vacation, you cannot shop for groceries, and you cannot even get your mail delivered to your house. But in the long run, if you just wait a few more months and keep buying and selling assets like stocks, you will be able to turn the tide.
We will not lose the war in the short run, but the Euro will certainly lose ground and that is why you need to be wise about what you invest in. The main thing is to avoid areas that have the most liquid assets, and to avoid those that have lots of debt. new debt.
Watch for signs like; looming inflation, weak growth, rising unemployment, weak bank credit. ratings, and a decline in earnings. All of this is telling you to stay away from the crisis areas. You should buy up assets.