General Discussion
In reply to the discussion: For those who don't know what the "Greece" problem in Europe is about - here's the explanation [View all]badtoworse
(5,957 posts)Yes, in absolute terms, the amount of money lost because of Greece's inability to service its debt is not a huge problem. On the other hand, a loss of confidence in the strength of those contracts by purchasers of Euro denominated bonds would be a problem for other countries, like Italy and Spain, that need to issue bonds to manage cash flow. This past week, a Spanish bond offering did not do well at auction. IMO, this was at least partially due to higher concerns over default risk based on what happened in Greece. Translation: increased borrowing costs for countries like Spain and Italy will force those countries to implement more stringent austerity programs of their own. I think you need to look beyond Greece in evaluating this problem.