Greek influence

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We keep hearing and reading about Greece influencing the world economy. Any why not? Greece had a profound impact on the history of the world with its contributions to theater, math, science, architecture, art, democracy, literature, and war.

For example, who can forget Homer’s Odyssey? This story was the basis of the cult movie hit O Brother Where Art Thou?… What about superior weapons (bronze shields) and the military strategy (the phalanx) that allowed the Greeks to conquer most of the known world.

A rare photo documenting how average male Greeks looked in ancient times. 🙂

Yes, Greek influence can be seen in our modern day governments and culture. We are also experiencing some economic turmoil from Greece as well. The question I keep getting asked is how does Greece impact interest rates?

As strange as it may sound, the turmoil taking place in Greece is impacting not only our economy, but stocks and interest rates as well. Here is a quick summary of how this takes place.

  • While Greece may be staving off defaulting on their sovereign debt, the threat of a default is causing the world markets to panic. This is hurting stocks around the world, slowing trade, and hurting the Euro.
  • When stocks suffer, investors typically pull money out of stocks (better return but more risk) and put them into all types of bonds (lower return but safer investment). As certain bond prices rise, interest rates go down.
  • With the Euro in threat of collapse (extreme but possible), the US Dollar has become the safe-haven currency of the world. Even though the US economy is struggling, the Dollar is a safer bet right now than the Euro. As foreign investors and governments buy our bonds, their values rise, and interest rates go down.

As you can see, the turmoil in Greece is impacting much more than just one country and one currency. Their financial difficulties helped push rates down to new historic lows (set in early October), and interest rates are not that far off from those levels. That means interest rates are really, really low.

If you haven’t talked to anyone about refinancing a mortgage OR still sitting on the fence waiting for rates to get better before you buy a home, don’t sit around forever. Rates can change. Last November, rates were about where they are today. By mid December 2010, rates were in the low 5’s.

The moral of the story? Take a few minutes to talk to someone in the mortgage industry that can offer advice and steps on how to proceed to either buying or refinancing a home. That way you’ll know if it is a good time or not to consider moving forward. If the property is in the state of Georgia, I’d be glad to help you sort through the options. All it takes is a call or email to get going.

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