Quarterly Commentary
September 30, 2011
Recent months have brought extreme volatility and sharply lower prices for stocks and commodities around the world. Concerns about a possible debt default by Greece, and slowing economic growth in both the U.S. and Asia are all blamed as reasons for the declines. But it is the situation in Greece, and the possibility of contagion throughout Europe, that seems to have the greatest impact on daily market volatility.
This leads one to ask, how can Greece be so important? After all, Greece has a population five percent smaller than the State of Ohio, and an economy that is one-third smaller. Indeed, if Ohio was struggling to pay its debts, investors around the world would not respond in such a way – if they noticed at all. Further, why does a possible debt default by a relatively small nation matter at all to stock prices in the U.S. or other nations?