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…
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Columns
‘Competition for talent’ a poor excuse to keep key executives’ pay under wraps
An overstimulated US economy is asking for trouble
Too many property agents? Cap commissions on home sales
Time to study broadening of private market access
Far from thawing, the US-China economic war could see a new front opening up
China’s better economic growth hides reasons to worry