Greece’s Issues Could Become More Than a Debt Crisis

New York (HedgeCo.net) – While hedge funds and institutional investors alike are mainly concerned with the sovereign debt and stock market in Greece, there could be a bigger concern in the long run and that is the geopolitical environment.
During the fifth annual Delivering Alpha conference in New York, a panel that included Richard Perry, CEO of Perry Capital, and Mary Callahan Erdoes, JPMorgan Asset Management CEO, addressed the potential consequences of Greece’s issues from a political standpoint rather than an economic viewpoint.

Ms. Erdoes stated that “Greece is a more a humanitarian issue than an economic one.” The concern being that if Greek citizens don’t see an improvement in their economy, they could turn more desperate and seek more radical solutions to their problems. Mr. Perry wondered which EU nation “the next Syriza Party would come out of,” referring to Greece’s radical left-wing party.
Greece could be particularly vulnerable due to its proximity to the likes of Russia, Turkey and Northern Africa. Russia is a concern as Vladimir Putin seems to be looking to increase his country’s influence in the region. Turkey has historically been an adversary of Greece, but with the country becoming more authoritarian and doing better than Greece economically, this could influence Greeks. Northern Africa is a factor as immigrants flee looking to escape radical Islamists and the growing presence of ISIS.

As these developments transpire, what happens in Greece could influence the rest of the European continent. If the citizens turn to more radical political parties for answers, the risk is that they are successful in improving the economic conditions and other countries take notice.

Geopolitical issues didn’t seem to be much of a concern during the bull market of the last six years, but investors need to pay attention as the global economic landscape could be changing drastically.

Rick Pendergraft
Research Analyst
HedgeCoVest

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