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It has often been said that there are two factors that influence investment of capital: fear and greed. I believe there is a third door available to those who don’t like to identify with either. Significantly less emotional than the first two is wise stewardship. Yes, we all want a safe place to shelter our resources and earnings. But if it is too safe it risks becoming moldy, like a bumper crop of grain stored in a damp basement. When earnings are parked in such spots they are removed from circulation, and idled, are rendered almost useless. O, that there were parking fees routinely charged for such fearful handling of value, as an incentive to keep the energy flowing!
Today’s interest rates on savings are certainly in the basement! But between Friday June 30 and Monday July 6 we will have good opportunity to apply resources to a series of alarming situations. The first moment arrives tomorrow, as a replay of Y2K: markets need to add one second to the trading day. The next will arrive by referendum. The Greeks have a choice to become a perpetual underclass, or to go bankrupt. This choice has roiled markets. The scenario has come about due to investment bankers who, back in 2010, massaged the Greek application for EU membership, at considerable profit to themselves. Stepping up to buy securities is a way of refuting this fear. We can suppose that the present fear suggests the possibility of bank failures around the global. But know this: commerce will continue.
A Nobel economist who has been largely correct about minimal likelihood of inflation (while the fearful foolishly bought gold as a hedge against inflation that never came) and the folly of austerity since 2007, is urging Greeks to vote NO on further austerity. I do think he is right on this also, and hope they heed his call. The opportunity really is for the Greeks to call the bankers’ bluff. Bankruptcy is better than knuckling under to raw power. Perhaps the Germans and financiers might remember a bailout known as the Marshall Plan which mercifully rescued them from economic disaster after WW2? And maybe we each should unpark some funds to buy up a flood of fear.