Why Greece won't trigger a global crisis

[Surya Gayatri]

Limited private sector exposure and massive public sector intervention means little risk of financial contagion spreading from Greece. But there is one area of uncertainty: European politics, says DW's Spencer Kimball.

No more surprises

Greece, on the other hand, has been gripped by a sovereign-debt crisis since 2010, and the private sector has had ample opportunity to reduce its exposure over the past five years.

"The more time you see that a country is being downgraded, that the assessment points to a higher probability of default, you have time to unwind that exposure," Reinhart said. "That's essentially what has happened since 2010."

Meanwhile, the public sector has expanded its role in financial markets since the 2008 crisis, reducing the risk of contagion.

The wildcard: European politics

It's still unclear how the financial markets will interpret the outcome of the Greek crisis. There's a possibility that markets will view a Grexit as a precursor to the unraveling of the eurozone.

"If that's how the markets perceive it, that could have negative effects," Bordo said. "The countries that are next on the list - Portugal is pretty small, Spain is not so small, and Italy is definitely not so small. That's the worst-case scenario."

http://www.dw.com/en/why-greece-wont-trigger-a-global-crisis/a-18565562

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Informative overview of what's at stake. Good read.