A good analysis, I’d say. If Tsipras is counting on all manner of chaos and panic in the EU, he’s badly mistaken.
Quite a few of my English-language students work in the international finance sector, and the general consensus is that Greece has been effectively contained; the fallout from a Greek default would be limited.
One of them, an accountant, she ran the numbers and noted that a Greek default would cost Germany $1 billion per year for the next 40 years.....and while that sounds like a lot, she reminded that German GDP is about $4 trillion per year.
One billion? Like she said, “The German government spends that much on toilet paper every year. They won’t miss it.”
Not so fast....
"And 2% of GDP is a substantial sum. If we scale that up to the US economy that’s around $340 billion. We’re not talking about chopped liver here. Imagine President Obama going on TV and announcing that the US is going to give $340 billion to some foreign country (this is substantially more than all US aid to all countries in any one year). Or, more pertinently, imagine a politician who doesn’t like Obama going on TV and announcing that Obama has just given $340 billion to some foreign country." Then add in that a number of those countries are currently poorer than Greece. Slovenia, Slovakia, Estonia for example. Now try to measure the political lifespans of people who say, right, we’re going to give $340 billion to people richer than we are."
It's true that Greece itself is not a major problem, but if Greece gets debt relief, there is Italy, Spain, and even France who will want a similar deal. The Germans can't handle all that.
My prediction is that Merkel will cave.
