Reality check with the problems in Greece
The worldwide impact of the Greece economy and the Greece debt crisis is examined.
Over the last month, the markets have gone from extremely excited about a recovery to running for safety because of the Greece debt concern. While the CIA World Factbook (http://www.cia.gov) shows that the public debt is 113.4% of GDP in 2009, let's look at the significance of Greece in the world economy.
The CIA Factbook shows that Greece has a GDP in 2009 of $342.2 billion. The public sector accounts for 40% of GDP. Not that they should be compared to the U.S., but here are some figures for comparison sake. The U.S. has a GDP in 2009 of $14.43 trillion. Our public debt is 52.9% of GDP. While the United States public sector spending amounts for about a third of GDP, the financial stability behind that budget seems on firm ground, even amidst world economic turmoil.
Now, let's examine Walmart. Walmart has a market capitalization of about $200 billion and reports revenue of $408 billion. According to Hoover's (http://www.hoovers.com), Walmart employs 2.1 million employees. Greece has a workforce of about 5 million in 2009. While I would argue that if Walmart went under, it would have dramatic effects to our economy. Greece has less importance to the world economy than Walmart. Walmart creates $408 billion in revenue each year and Greece has a GDP of $342.2 billion...
Going forward, our markets will ultimately move by improving earnings. According to Zacks (http://www.zacks.com), first quarter earnings were very strong with 74.3% of companies reporting better-than-expected results. S&P 500 net income is expected to jump 39.0% in 2010 and 17.8% in 2011.
While the Greece turmoil might be a concern to the market, an investor might think this concern should only be minor. However, the concern has ballooned into a major issue and perhaps has become overdone.