Greek contagion


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3 November, 2011

Since yesterday, news reports are full of comments like this:
"Many economists fear that if Greece exits the euro, it could lead to financial contagion, as investors and ordinary bank depositors in other eurozone countries may fear that their own government will follow suit."

What does this mean? Are the Spanish looking to the Greeks as a model? Esos griegos tenían un gran éxito con su incumplimiento de las deudas. Hagámos lo mismo.
Or is it a matter of queueing up? Greece has first dibs on default, and Spain just has to wait its turn. Or is this setting up a resonance in a Sheldrakian morphic field of default patterns? Perhaps we are witnessing the final consummation of the marriage of 21st century mathematics and 20th century pseudoscience that finance has been tending toward for the past three decades (at least).

Surely the impact on investors will depend in part on the effects seen from a Greek euro withdrawal. At the very least If we think back to recent history, presumably any reasonable person would have thought, after the Lehman Brothers shit-storm, that the US financial authorities would be less likely to allow another similar bankruptcy to proceed. So, if Greece leaves the euro in a ball of flames, Spain will be unlikely to see it as a model. And if Greece's exit from the euro isn't so terrible then... maybe it's just not so terrible.

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