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Greece is back on top of the international economic and political agenda after a brief respite. How can you build a firewall around your portfolio to insulate yourself from the big fat Greek mess?
The immediate question is: Who’s going to lead Greece out of this crisis (or into a worse one)?
Worries that a new government led by the left-wing Syriza party could lead the country into rebellion against measures designed to make sure that it stays in the euro zone have sent European markets down this week. Syriza’s leader, Alexis Tsipras , has won votes railing against austerity measures imposed as part of Greece’s bailout by the international community, and some analysts are worried that he will try to tear up the existing agreement, leading to Greece defaulting on its debt and crashing out of the euro – which could lead to contagion in other larger economies.
Tsipras may not be the threat many in the markets fear. Parties labeled as extreme often become more pragmatic once they are in power. The election of nominally socialist Francois Hollande in France has not yet heralded the drastic changes to French policy feared by many in the markets. There will be some relaxation of the terms of the Greek bailout no matter who gains power in June, Credit Suisse’s head of research Giles Keating believes.
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