I’ve two young children and give in from time to time. So far be it from me to give parenting advice. But I also have experience with parents who placate adult children financially during hard times. There is a difference.
Compassionate parents of distressed children often extend themselves beyond their means to keep a child afloat. The intent is to stabilize the child’s economy until he can pull himself up by his bootstraps. Sometimes this jeopardizes the parents’ financial future, concurrently short changing siblings now or in the future.
Harsh as it may sound, such effort enables the distressed child to change nothing. If she knows her obligations are covered, there is no reason to alter anything. My experience in these situations is that needs continue to grow, not the other way around.
Enter Greece and her mounting obligations, and her parents, the European Union (EU). Greece entered into a default situation almost two years ago. Since then the EU has injected billions without reform requirements attached. These monies have arguably done nothing other than pay monthly bills owed on increasing debt.
It doesn’t take a financial genius to understand that borrowing money to pay for money already borrowed is a bad financial position. Scratch that, it is the worst financial position - worse than bankurptcy - as the ditch deepens the longer it continues.
Several months ago the markets began to bark at this growing concern. It’s not just Greece that has caused the commotion. There are a variety of distressed countries making up the “PIGS” nations (now PIIGS): Portugal, Italy, Ireland, Greece, and Spain.
Greece by itself isn’t a threat to topple anything. The fear is if the EU continues to pour resources into this one problem child a domino effect could occur with the others. If this happens, indefinable familial ramifications would result. And now that we’re all financially related…lets just say that is a legitimate concern.
Continuing to serve Greece's debt sans accountability isn’t just gruesome financial management, it is the epitome of bad parenting.
This week the EU has finally begun speaking in terms of combined stabilization for the financial structure of Europe as a whole, akin to programs instituted in the U.S. several years ago. For now, the global market has reacted positively to something other than an exhausting slush fund to pay Greece’s bills.
If our experience in the U.S. is any indication, no matter how poorly thought out or implemented, a unitized process with increasing accountability may be enough to stabilize more drastic problems. While not perfection, it would be progressive.
And anything that can reduce the focus on one tiny teetering nation is progress our investments will be appreciative of, literally.
I welcome your questions and comments: becker@wiserfinancial.com
Marc Becker
Accredited Investment Fiduciary
Columnist, The Advisor Sherpa
To read past articles and view past videos, visit:
www.marcbecker.tv
Golf Tip of the Week Get Down Low Hitting a ball that lies well below your feet is never easy, but it need not be as difficult as your instincts make it.
The tendency in the situation you see here, with the ball in a depression, is to lower the clubhead down to the ball by bending the knees. The problem is that excessive knee bend severely restricts the swinging motion. Over the years, I've found I can partially lower myself by widening my stance, and then bending my back. This way I can keep my legs fairly straight, permitting a little more freedom of movement.
The swing will still be restricted in size and force, so I normally use one more club--say a 6-iron instead of a 7-iron. Try not to be overly aggressive when you encounter this situation; it will help you to avoid wild shots and big numbers.
Source: http://www.nicklaus.com/nicklaus_golftips/
Trivia Time This week's question: The next full moon is Oct. 11th. What is its official nickname?
New Feature! This week's search engine challenge: What lake is this?
Do you know? E-mail your answer wendy@wiserfinancial.com and if you are correct, receive a free "Way to Go!", "You Rock!", or other congratulatory phrase. Then brag to all your friends about how smart you are.
The answer will be in next week's newsletter!
Last week's question: What year was the European Union established?
Answer: 1993. The EU was established under its current name by the Maastricht Treaty.
Congratulations to David R. for getting the correct answer!
Source: www.wikipedia.com
