Putting Greece and China into perspective

Greece’s and China’s recent economic woes – Greece’s default on its debt and China’s stock market crash – may be difficult to grasp for those in other parts of the world. We’ve gathered five articles that offer some perspective on the problems these two countries are currently facing.

Think Greece can’t happen here? You’re wrong

“[J]ust like Greece, the United States government has been living beyond its means, running up an enormous debt that will eventually need to be repaid,” writes Michael D. Tanner of the Cato Institute in this New York Post article. “The danger for the United States is that spending on entitlements will surge in the coming decades, which means that, absent reform, they take over the economy.” Read the full article.

Greeks Spend in Droves, Afraid of Losing Savings to a Bailout

euro banknotes, euro, currency
How does the average citizen respond to an economic crisis? Believe it or not, often by spending a lot of money on tangible assets. While it may sound counterproductive, the concept is simple: spending money on tangible assets allows you to store your wealth in case your savings are wiped out. If your savings do end up being wiped out, you can retrieve your money by liquidating your assets. Many people buy gold in times of looming crisis for this very reason. During Russia’s currency crash in late 2014, Russians bought flatscreen TVs and other electronics en masse. The Greeks are now following suit. “Increasingly concerned that greater economic trouble lies ahead of them, and limited in how much cash they can take out of banks, Greeks have been using their debit cards to buy ovens, refrigerators, dishwashers — anything tangible that can hold its value in troubled times,” writes the New York Times. Read the full article.

Why the Average American May Be Worse Off Than Greece

“Greece may be dealing with a debt crisis, but the average U.S. household may have more to lose,” opens this TIME article. For instance, Greece owes 1.77 euros for every euro it earns, while the average U.S. household owed $204,992 in mortgages, credit cards, and student loans in mid-2015 with a median household income of $55,192 – a debt-to-income ratio of 370%, which is much worse than that of Greece. Read the full article.

China’s Richest Billionaires Lost $195 Billion In One Month Amid Stock Market Rout

“The 205 Chinese billionaires currently tracked by the Forbes Real-time Billionaires List have lost a total of $195 billion since the benchmark Shanghai Composite Index hit its peak on June 12,” reports Forbes. Jack Ma, founder and chairman of Alibaba Group and the 18th richest man in the world, has lost $3.7 billion. Wang Jianlin, the richest man in China, lost a staggering $6.5 billion. Read the full article, which demonstrates just how much can be lost due to a stock market crash in such a short period of time.

Good Luck Finding a Place to Hide as Global Markets Crumble

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Investors tend to pile into so-called “safe haven” assets – gold, for example – in times of economic turmoil. However this time around, with Greece and Puerto Rico deeply in debt and China’s stock market selloff, “Traders aren’t so sure they can find anything that’s truly safe right now,” writes Lisa Abramowicz in Bloomberg. Even government bonds, which are traditionally considered a safe investment during risky times, don’t have investors’ trust right now. “After all, where will investors run? The government debt that used to be their safety looks more and more treacherous.” Read the full article.

If these articles don’t convince you to own gold as a hedge against global economic crisis, it’s hard to imagine what would. Gold cannot be printed by governments and tends to hold its value better than paper assets in times of crisis. Which would you rather trust: paper or gold? Call American Bullion today at 1-800-326-9598 to learn how easy it is to own gold and secure your financial future. Ask about opening a Gold IRA or making a purchase for direct delivery to your home. Piece of gold, peace of mind.

Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.