Euro Exit by Southern Nations Could Cost 17 Trillion Euros
With Google stealing a lot of attention, let’s not forget about the European mess. Latest out of the German think tank, via Spiegel.
A Greek euro exit on its own would have a relatively minor impact on the world economy, but if it causes a chain reaction leading to the departure of other southern European nations from the single currency, the economic impact on the world would be devastating, a German study warned on Wednesday.
The researchers arrived at a particularly bleak assessment because they didn’t just calculate the losses of creditors who had lent money to the crisis-hit nations. They also analyzed the possible impact of a euro collapse on economic growth in the 42 most important industrial and emerging economies that make up more than 90 percent of the world economy.
Using an econometric model, Prognos first calculated the effect of a Greek euro exit, and then simulated the step-by-step fallout from Portugal, Spain and Italy abandoning the currency as well.
Full reading here.