The New CS Board

[jumanji0881]

True Greece is a small economy. And I've seen the argument many times that a Greek default should therefore not have much effect on the rest of Europe. The problem is that it has ramifications for all bond holders of EU sovereign debt, including virtually all of the European banks. It brings into question the viability of all sovereign debt and it is the reason that large sums of money are being moved from the banks in the periphery to German banks. Bond holders are demanding much higher interest rates in order to compensate for the risk of owning debt which may not be repaid by the PIIGS. A default by Greece also brings into question all of the Euro denominated contracts Greece has with other countries and whether these contracts will be honored. So, yes Greece is small, but it has a large impact.