Reality check with the problems in Greece

By Wade A. Barker, 19th Apr 2012 | Follow this author | RSS Feed | Short URL http://nut.bz/3_rp4kn3/
Posted in Wikinut>Business>Investment

The worldwide impact of the Greece economy and the Greece debt crisis is examined.

First Section

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.

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Meet the author

Wade A. Barker
Wade Barker has over 15 years of experience in the stock market, the U.S. and world economies. He worked for a technology fund of a large mutual fund company managing $11 billion.