A Barclay's analyst was on CNBC saying that the presumption is now that Greece will leave. He does also say that while markets at least in the US-the European stock markets were down more sharply-something clear needs to come out of Europe in the next 48 hours or there will be more volatility.
http://video.cnbc.com/gallery/?video=3000394306
Again, it's hard to think that Greece will be a problem for the US economy if you think of it as just this small country that contributes a very small slice of EU GDP. If there is a risk-and I don't know how directly it would hit the US-it's more a question of what a Grexit does to the status of the EU credibility.
What Tsipras did here might serve as a model for other leftist politicians and some of the other peripheral countries. The worry is more if this could be the beginning of the end of the euro itself.
More from Krugman on Greece:
"Jared Bernstein weighs in on the big No, hopes that it leads to a change in Europe’s approach, but acknowledges the political difficulties:
"To be fair, it’s not that simple. There are structural political factors in play, endemic to the fact that the currency union is not a political union, nor a fiscal union, nor a banking union. As one German economist put it to me, “How do you think the people of Manhattan would like bailing out Texas?” Fair point, and a non-trivial challenge, for sure."
"Ahem. As it happens, the people of Manhattan did bail out Texas, big time. I wrote about it here. The savings and loan crisis, which was very costly to taxpayers, was mainly a Texas affair:
"The cleanup from that crisis cost taxpayers about $125 billion (pdf), back when that was real money. As best I can tell, around 60 percent of the losses were in Texas (pdf). So that’s around $75 billion in aid — not loans, outright transfer."
"Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks."
"But of course Manhattan was never asked to bail out Texas; we had a national system of deposit insurance, and the big Lone Star bailout was automatic."
As to the costs of a "bailout' it's important to recognize that it is far cheaper than the the bailout of East Germany by West Germany after reuninification:
http://diaryofarepublicanhater.blogspot.com/2015/07/germany-and-greece-cowhos-parasite.html
http://video.cnbc.com/gallery/?video=3000394306
Again, it's hard to think that Greece will be a problem for the US economy if you think of it as just this small country that contributes a very small slice of EU GDP. If there is a risk-and I don't know how directly it would hit the US-it's more a question of what a Grexit does to the status of the EU credibility.
What Tsipras did here might serve as a model for other leftist politicians and some of the other peripheral countries. The worry is more if this could be the beginning of the end of the euro itself.
More from Krugman on Greece:
"Jared Bernstein weighs in on the big No, hopes that it leads to a change in Europe’s approach, but acknowledges the political difficulties:
"To be fair, it’s not that simple. There are structural political factors in play, endemic to the fact that the currency union is not a political union, nor a fiscal union, nor a banking union. As one German economist put it to me, “How do you think the people of Manhattan would like bailing out Texas?” Fair point, and a non-trivial challenge, for sure."
"Ahem. As it happens, the people of Manhattan did bail out Texas, big time. I wrote about it here. The savings and loan crisis, which was very costly to taxpayers, was mainly a Texas affair:
"The cleanup from that crisis cost taxpayers about $125 billion (pdf), back when that was real money. As best I can tell, around 60 percent of the losses were in Texas (pdf). So that’s around $75 billion in aid — not loans, outright transfer."
"Texas GDP was about $300 billion in 1987. So this was equivalent to giving — not lending, not even taking an equity stake — Spain 25 percent of its GDP to bail out its banks."
"But of course Manhattan was never asked to bail out Texas; we had a national system of deposit insurance, and the big Lone Star bailout was automatic."
As to the costs of a "bailout' it's important to recognize that it is far cheaper than the the bailout of East Germany by West Germany after reuninification:
http://diaryofarepublicanhater.blogspot.com/2015/07/germany-and-greece-cowhos-parasite.html
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