Greeks 1 Trojans 0

Posted on: 15 November 2011 by Andrew Stallard

Are things really looking that bad for Greece now? Getting kicked out of the Euro might in fact be a godsend, but no such silver lining awaits Britain or the rest of Europe

A trojan horse, yesterdayReaders may remember from their school days the Trojan War and the fall of Troy. It's a story originally told by Homer in the Iliad, a story thousands of years old, but still relevant today.

If, like some of our advisers, your school-days were a few years ago, here's a quick history reminder: in Homer's poem, the Greeks fought the Trojans, besieging Troy after the beautiful Helen of Troy was stolen away from her Greek husband. The Greeks after 10 long years of war then tried a different tactic by supposedly giving up, sailing away and leaving an ornate wooden horse as a tribute to the Trojans.

The horse with hidden Greek soldiers inside it was taken into the city by the jubilant Trojans. After dark the Greeks exited the horse, slaughtered the guards and opened the gates to the secretly returned Greek army and the fabulous city of Troy was destroyed forever.

Admittedly, the Greek national debt crisis doesn't mean they are at war with the rest of Europe and perhaps seeing Chancellor Merkel as the beauty Helen, the “face that launched a thousand ships” is a stretch too far. Equally unlikely is president Sarkozy as the wise Trojan King Priam and former Prime Minister Papandreou as the heroic Greek Achilles. However, the Greek national debt deception does have parallels in modern times when the Greek economy was allowed to join the Euro. Despite huge debt and other problems, their economy was deemed to have passed the tests necessary to join the Euro and they were admitted.

The guards on the gate of the Eurozone were just as negligent as the Trojan soldiers. It could be argued that there was a coalition of deception between the Greeks desperate to join a stable currency and the politicians of the European Union eager to build an ever wider empire.

But where does Britain come into the story? Seeing as we don’t use the Euro and our banks have little money in Greece, will Greek national debt affect us? It's certainly possible. An impoverished Europe will not prove an easy market to sell our goods. Most importantly, it is the effect on the already severely weakened banking system that could prove disastrous. The Greeks have borrowed huge amounts of money, much of it from French and Dutch banks, but the bad loans are hidden among banks throughout Europe.

If the Greek national debt default is disorderly and a signal is sent from Athens that the country is bust, this debt will become a 'pass the parcel' game between the banks. Mistrust between banks globally would once again cause the banking system to seize up as banks stop lending, businesses cannot borrow and the World economy goes into recession. All of which would be a big problem for us in Britain.

And what of the Greeks themselves? Will the loss of the Euro be such a terrible thing for them? Probably quite the opposite; they will readopt the Drachma, and with this devalued currency their goods will be cheaper making exporting and economic recovery easier and providing a desperately needed drop in unemployment.

What that means for us here in Britain is that a holiday in Greece next year could be very affordable.

The view of many is that it's not a question of will Greece be leaving the Eurozone, but rather how will they leave it. Will it be orderly, giving time to avoid economic carnage? Or will it be chaotic, with Italy the next economy to fail, leading to the certain breakup of the Euro?

The Greek national debt tragedy is largely mirrored in Italy, but on a grander scale. From Greek tragedy to Italian opera; with neither offering much likelihood of a happy ending.

For a free consultation about your investments and possible exposure to Greece, contact Andrew Stallard on 0845 230 9876, e-mail or take a look at our website

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