Something is wrong. We are on the brink of Europe's 3rd biggest financial crisis in 100 years, the second in 3 years, and all this because of the government debt of a country that makes up 2% of the European population (barely 0.2% of the world's citizens) and a tiny fraction of the global economy : Greece. There are talks of the euro falling apart soon, as if it was utterly unimaginable that the single currency survive without Greece as a member. It's not making much sense. Why is Greece so inescapable ?
Stocks of quite a few major European banks (BNP-Paribas, Société Générale, ING, Commerzbank, Intesa Sanpaolo) dropped by roughly 10% yesterday alone, and few banks are now worth more than they did in the aftermath of the 2008 credit crunch. All this because investors are afraid that banks will not recover what the money they lend to the Greek state or invested in Greek companies. But how much can it be worth in absolute value, as a share of all their loans and investments globally ? Were it only one or two banks who had invested massively in Greece, I would understand, but we are talking about all European banks, and even American ones.
In 2008, it was the subprimes from the US real estate market, a truly huge amount of money involving fraudulent or misguided investments from banks all over the developed world. The culprit was the US market, the world's biggest, the power behind global finance. A global financial crisis was inevitable. But what about bantam Greece ? The Hellenic Republic is not hauling the world economy in normal, healthy economic times, yet strangely it seems to be now. If the US state of Indiana (closest equivalent to Greece in terms of GDP) went bankrupt, you wouldn't expect the whole US economy to go bust and the US dollar exploding in 50 currencies. That would be completely surrealistic. Is it any less surrealistic with Greece in Europe ?
Why can't Greece just leave the Eurozone and write off some of its bad debt, so that we can all put all of this behind us ? If I am missing something please let me know.
Stocks of quite a few major European banks (BNP-Paribas, Société Générale, ING, Commerzbank, Intesa Sanpaolo) dropped by roughly 10% yesterday alone, and few banks are now worth more than they did in the aftermath of the 2008 credit crunch. All this because investors are afraid that banks will not recover what the money they lend to the Greek state or invested in Greek companies. But how much can it be worth in absolute value, as a share of all their loans and investments globally ? Were it only one or two banks who had invested massively in Greece, I would understand, but we are talking about all European banks, and even American ones.
In 2008, it was the subprimes from the US real estate market, a truly huge amount of money involving fraudulent or misguided investments from banks all over the developed world. The culprit was the US market, the world's biggest, the power behind global finance. A global financial crisis was inevitable. But what about bantam Greece ? The Hellenic Republic is not hauling the world economy in normal, healthy economic times, yet strangely it seems to be now. If the US state of Indiana (closest equivalent to Greece in terms of GDP) went bankrupt, you wouldn't expect the whole US economy to go bust and the US dollar exploding in 50 currencies. That would be completely surrealistic. Is it any less surrealistic with Greece in Europe ?
Why can't Greece just leave the Eurozone and write off some of its bad debt, so that we can all put all of this behind us ? If I am missing something please let me know.
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