Greece will hurt, but it won't be Lehman II

GREECE is a mess. The banks are shut; withdrawals from ATMs are strictly limited. A referendum will determine whether or not Greece accepts tough conditions for receiving further financial aid. It looks (and is) grim. Global stock markets are rattled. But don't be fooled.

Whatever happens to Greece, the fallout for the rest of Europe and the world economy is probably modest. It's conceivable that the Greek turmoil will lead to a Lehman Brothers II - a global financial panic - but the odds are against it.

There are three main reasons for this. In written testimony last week for the Senate Banking Committee, four economists outlined them.

First, Greece's economy is tiny, about 1.8 per cent of the entire eurozone (the 19 countries using the euro), according to Jacob Kirkegaard of the Peterson Institute. This means that even if Greece's economy sinks further - almost a certa…