With many investors wondering what to expect in the aftermath of the Greek elections, today 40 year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson is founder of The Portola Group, one of the premier boutique firms in the United States. Here are Fitzwilson’s observations: “Investors and savers alike are transfixed on the election in Greece. The headline issues were whether or not Greece would retain the Euro, stay in the eurozone, return to the drachma, default on the debt owed to European entities or a combination of the above. We believed those outcomes were secondary to the much more important issues.”
Robert Fitzwilson continues:
“We believe there are really three high-level issues contained in this monetary fog. The first is ‘free money.’ From the so-called PIIGS perspective, the euro experiment was about receiving free money from the Baltic-bordered countries. Indeed, an absolute avalanche of money flooded their way, not only from their European neighbors, but also from the rest of the world as the euro was touted as an alternative to the U.S. dollar.
The money was squandered, but it created huge new demand for products from manufacturing powerhouses, specifically Germany and China. This is called vendor financing. There is an expectation by the lenders of being paid back. Clearly, that is not going to happen….