Dennis Tubbergen gives his take on the financial troubles in the euro zone.
Grand Rapids, MI -- (SBWIRE) -- 11/15/2011 -- Dennis Tubbergen is a financial advisor, advisor to financial advisors, author and radio talk show host. Tubbergen has been keeping his readers updated on the economy for months, and frequently talks about issues in the U.S. and globally. In his blog on November 7, 2011 Tubbergen made some amusing but realistic comments on Europe’s current crisis.
“It wasn’t all that long ago that European leaders were united in stating that they were doing everything possible to save the Euro and keep the European Union intact,” began Tubbergen. “One of my first thoughts when such a statement is made is that I never believe anything until it’s been officially denied.”
According to Tubbergen, the public statements relating to the European economic situation are changing. Tubbergen refers to an article published in The Guardian on November 3, 2011, which states in part, “The G20 is planning to increase the crisis-fighting firepower of the International Monetary Fund after the start of its summit was dominated by the first open admission from EU leaders that it might be necessary for Greece to leave the eurozone if the single currency is to survive.”
The article goes on to quote George Osborne as saying there is a “real sense of urgency” while recognizing the IMF “may need extra resources to cope with a deteriorating global economy.”
President of France and summit host Nicolas Sarkozy is quoted as saying, “We have said clearly that we want Greece to stay in the euro, but we cannot wish for this if she does not want it herself. We have to defend the currency – we cannot accept the breakup of the euro. That would mean the breakup of Europe.”
“It is my view that when policymakers begin to openly admit, even in a roundabout way, that their attempts to keep Greece in the euro may be failing, failure is not only assured, it’s probably close,” predicts Tubbergen.
Tubbergen cites the response by policymakers to this problem – more possible funding to the IMF to provide additional assistance to countries drowning in a sea of excessive debt.
“Given that the IMF receives funding from many different countries around the world, this means that taxpayers around the world – including the U.S. – may be providing assistance to these countries at a time when many of these countries have their own debt issues that will soon need to be addressed,” states Tubbergen.
Tubbergen believes policymakers are dealing with the debt problem by “kicking the can down the road,” electing to deal with today’s debt by adding more debt to a debt-laden system, only to have to deal with a larger, more ominous debt crisis tomorrow.
“The article raises some questions, with the largest one being, ‘If Greece does leave the euro, how does the rest of Europe act?’” questions Tubbergen. “I’ve been of the belief that a Greek exit from the euro would mean that other countries with significant debt problems would follow.”
Tubbergen refers to an article from Reuters and published in The Toronto Star on November 3, 2011 which discusses the possible outcomes of such a move, including a comment by German Chancellor Angela Merkel in which she claims “an exit would lead to a devastating ‘domino effect’ across the eurozone.”
“I believe the Greek situation is the European ‘canary in the coal mine,’” states Tubbergen. “While the Greek financial crisis has now come to a head, the debt levels of some much larger euro countries will one day in the near future have European leaders longing for the day that their biggest problem was Greece.”
Tubbergen’s bottom line here?
“When Greece leaves the euro, which in my view is inevitable, the policy response will be, as the article states, more liquidity,” concludes Tubbergen. “That means more printing of a currency already in trouble, which will further weaken it.”
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices at 961 4 Mile Road N.W. in Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog. His weekly talk show The Everything Financial Radio Show is simulcast on three Michigan metro stations and also airs to over 600,000 financial advisors.
The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties.
Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.
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