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What Would the Effect of a Greek Default be on the Economy at Large?

None. Well, not really. Almost none.

The banks holding Greek debt have already taken a 70% loss on the value of their bonds, and are still functioning, albeit with the aid of the ECB (European Central Bank).

Since the lion’s share of the losses have already been eaten without the markets showing any real adverse effects, I would expect the last 30% to go down pretty easily, washed down with a few satisfying gulps of damn-near interest free money from the ECB, also.

Not to say there wouldn’t be a good week or two downswing on the markets, but as more time passes, the more banks and investors are getting themselves positioned in a way in which they can handle the hit.   If anything, I would think it would actually be a great point to do some buying, because the market will essentially be holding a sale.

4 Comments

  1. Carolina says:

    i agree with you

  2. Camila says:

    nice post.

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