MINNETONKA, Minn. — A Minnesota financial advisor said Monday that local investors have little need to move too quickly as a result of the Greek financial crisis. The Greek people voted overwhelmingly to reject further austerity measures demanded by their Eurozone creditors.
John Feste, Managing Principal of the Marks Group Wealth Management said that the attention given to the Greek drama will outweigh its impact globally.
“The average investor probably does not have much direct exposure to Greece,” said Feste. “Their contribution to the global economy is equivalent to that of Alabama. So, being one of the smaller countries in the Eurozone, I think the impact of the situation is somewhat contained.”
Still, Feste said there could be some impact on local portfolios.
“I mean people are going to get their statements for their 401k’s within the next couple of weeks and they are going to be down from the last statement that they received,” said Feste. However, he said there are other factors in the market than Greece that will result in a short-term downturn.
The Greek crisis is a puzzle to many Americans. How can a country with only about 2 percent of the Eurozone economy have so much impact in the region? Professor Agapitos Papagapitos, University of St. Thomas Economics Professor, said there is fear of a domino effect with other small economy nations in the Eurozone, such as Italy, Spain and Portugal.
“The problem with Greece is that there are debts that have accumulated over time and they are having a very difficult time paying back those debts and they are due now, so they have to go back to the other members of the European Union and ask for new loans,” said Papagapitos.
On Sunday, the Greeks voted overwhelmingly to reject a plan that would have required Greece to cave into investor outrage. The Eurozone partners want the Greeks to tighten their belts.
“Cut the pensions. Increase the retirement age and not so much the fact that the taxes are not high,” explained Papagapitos. “They are just having a very difficult time collecting the taxes, a lot of tax evasion. (It is) almost part of the fabric of how business is done in Greece.”
Monday afternoon, it was announced that there would be a meeting of key Eurozone partners in Paris to try to work out a deal to keep Greece in the Eurozone and out of financial trouble.