Today, in a national election, Greeks voted overwhelmingly to put a stop to continued austerity measures and trying to please the EU countries who have been tying continued economic support to higher taxes and reduced government spending.

In the days leading up to this election, Greece defaulted on a portion of their debt that had come due on Friday, while at the same time, European Union leaders had been framing the election as a vote to either stay in or leave the European Union and the Euro common currency.

Leaving the EU and the Euro, and returning to the Drachma as the national currency would almost certainly subject Greece, at least initially, to even worse economic conditions than they have been enduing for the last several years. The Greek economy has been in recession since 2010 and unemployment is running at 25%. A potential light at the end of the tunnel for the Greeks could be that rather than paying their massive debts in Euros, they could pay them off in the future with dramatically devalued Drachmas, easing the pain. The flip side of doing this is they would almost certainly face much higher levels of inflation in the process, reducing the Greek standard of living even further.

In the aftermath of the election, there is already conciliatory talk coming out of the EU on the Greek debt situation, so it is still possible that the Greek electorate’s gamble in rejecting austerity could bring about better debt repayment terms than they have been able to get up until now. Stay tuned.

The impact of the election for us as investors is continued uncertainty, and a sense that we are in uncharted territory. No country has ever been kicked out of the EU, or left voluntarily. In addition, there is concern that Greece’s unfolding debacle might spread to other EU nations who have also been coping with high debt loads and enforced austerity. Will the Greek default create contagion that drags down Italy, Portugal, and Spain? So far, the answer is no.  Interest rates in those countries have been holding pretty steady thus far, and you can bet that the EU will do whatever they need to do to stop any contagion started by Greece from spreading.

As you can probably imagine, today’s vote is dragging down stock markets around the world. Early indications show the German stock market opening down 4%, and in the US, S&P 500 Index futures are currently down about 1.5%.

This isn’t time to panic. The Greek economy represents 0.3% of the global economy, so this isn’t likely to be a huge game changer for the world. Like every other crisis, this too shall pass, and if it does happen to bring down stock prices more than we expect, we will be taking advantage of the temporary low stock prices to add to your holdings.

Feel free to call us with any questions or concerns you may have about this.

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