The Greek Saga Might Continue

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What's going on?

You might recall that it was a big deal last summer when Greece was loaned more money in a bailout by the eurozone (and others). Well, that bailout is coming up for an official review on May 24 – and an agreement needs to be made in order for Greece to be dispersed more money (as was part of last summers agreement).

What does this mean?

Essentially, under the current terms, there is no way that Greece will be able to pay back the money that it has been lent by the eurozone, the International Monetary Fund (the IMF – a supranational economic body) and the European Central Bank (which has taken a back seat at the moment). The IMF would like to formally restructure Greeces debt (for example, by lowering the interest rates that Greece must pay and extending their repayment dates) so that there is a greater likelihood of Greece eventually paying it back. Germany is insisting that Greece not be cut any slack (at least not right now). Greece, unsurprisingly, would like to be cut some slack ASAP cue the negotiations.

Why should I care?

For stocks: If theres no agreement by May 24th, things could get hairy – again. Theres always wiggle room with these deadlines, but the idea is that the major players (namely the IMF, Germany and Greece) will agree what to do about any potential restructuring of Greeces debt before then. If this doesnt happen, the funds wont be dispersed and the Greek turmoil could once again infect the financial markets (dj vu vu vu).

For you personally: Europe has a lot going on right now a revived Greek crisis wouldnt help matters. Theres a migration crisis occurring, the Brits are about to vote on whether to leave the EU and a swathe of populist parties, like the Freedom Party in Austria, have recently gained political popularity. Its fair to say that political risks in Europe i.e. to your investments have increased lately. And thats one potential reason that the recent performance of European stocks has been mediocre.

Originally posted as part of the Finimize daily email.

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