Why Greece's Crisis Won't Spread
In the last couple of weeks, the market has obsessed over whether Greece will experience a true default or merely an orchestrated bond exchange. Since no one believes Greece is large enough in and of itself to cause serious damage to the world economy, the clear source of the market's concern is contagion.
However, it seems that commentators are assuming that the chain of causation goes as follows: bad event leads to fear leads to contagion. But that is a simplistic approach. Real-life contagion doesn't work like that. In today's column, we'll explore what actually causes contagion and why Greece doesn't fit the formula at all....862 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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