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It's hard to see how the combined problem of Greece and Puerto Rico nearly simultaneously will not be felt globally. A bigger worry globally is that China is s

• roymurdock 11y ago
  Greece = 2% of EU GDP Puerto Rico = 0.006% of US GDP Both of these default decisions are more ideologically driven (setting precedents) than they are borne of actual economic necessity, such as the TBTF bank bailouts of 2008. In Greece's case it's not even the private sector's problem anymore as debt restructuring transferred debt from the banks to the EFSF, an entity funded by public, gov't funds (mostly German, French, & Italian). [0] It's fantastic to see how these debt restructuring deals really work. In essence, creditors wrote down 25% of the debt in order to transfer private risk that they had taken on themselves onto the public. So the direct losers in the case of a Greek default are the taxpayers and, by the transitive property, the politicians of Germany, France and Italy. Indirectly it would be a blow to investor confidence in the EU, but many would probably see Greece leaving the EU as a positive for the overall EU economy and the Euro. [0] http://www.socialeurope.eu/2012/03/the-mystery-tour-of-restructuring-greek-sovereign-debt/ http://www.socialeurope.eu/2012/03/the-mystery-tour-of-restr...