Economists appear to be divided on the prospects for a Greek debt default, according to recent survey data from the National Association for Business Economics.
The data found that 51 percent of economists surveyed do not believe that Greece will default on its debts, even though there is more of a consensus that the country will also need to restructure some debt to keep this from happening.
Another 12 percent in the survey said that they expect Greece to default on its debt in the next year, while 37 percent believe that a default will occur beyond that point after what is described as "short-term maneuvering" allows some extra time.
"Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects. Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," said NABE President Lynn Rea.
Rea added that economists polled by NABE indicated that are "extremely concerned about large federal deficits going forward."
A Greek debt default could have considerable financial implications for world markets since it could expose a number of banking institutions, especially European ones, to billions of dollars in new financial losses. This would come at a particularly inopportune time since world markets have largely been moving beyond the recession of the past couple of years.
Greece ran up an unsustainable budget deficit in recent years and past governments have been accused of basically cooking the books in order to create the illusion of complying with European Union debt standards.
Also generating concern in Europe have been Spain and Portugal, which experienced their own recent credit rating downgrades and which have been taking steps to lower their budget deficits. Other countries, including England and Ireland, are expected to cut costs in the coming months in order to lower concerns about their own debt levels.
The NABE report added that economists are extremely concerned about the size of the U.S. deficit as well. Still, the economists projected that the employment situation will continue to improve in the coming months, while the gross domestic product is now expected to rise by 3.2 percent for both 2010 and 2011.
With uncertainty remaining very much a reality in world financial markets, now may be a good time to consult with silver and gold dealers about reliable investment options.
