People are saying that there’s going to be a contagion. Is there even a possibility of that happening? But a majority of business channels seem to be saying so. That’s a lot of hot air with very little substance. I personally feel that there’s no possibility of a contagion effect.
Reason # 1- Exposure of European (countrywise) banks to Greece has come down drastically over the last five years (2009 to 2014) in USD in billions
|2009 in $bn||2014 in $bn|
That’s a whopping drop of 87.5%. Even in the improbable case of Greece defaulting on all these $17.99 billion, I am sure these banks together can digest that blip.
Reason # 2- The Greek circus has been running long enough (since 2009) for investors to have moved their Greek exposure to other shores.
Reason # 3- Greece is a minuscule part of the Eurozone (only 2% of the combined GDP of the Eurozone)
Reason # 4- The others from the PIGS community (Portugal, Italy & Spain) have tightened their belts in the last five years, so a domino effect seems unlikely today as compared to five years back Left to itself, Greece might recapitalize the drachma (its currency before it became a part of the Eurozone) and put its finances in order with its own internal brand of austerity