It's starting to seem like there's a better chance of Mark Zuckerberg ditching hoodies than Greece avoiding default.
In some respects though, the strange thing about the Greek default hoopla is the way we seem to have forgotten that sovereign defaults aren't all that unusual. Between 1998 and 2004, Russia, Argentina, Ecuador, Indonesia, and Pakistan -- among others -- all defaulted. Ukraine defaulted twice.
Going back to the early 1800s, Austria has defaulted a few times, Germany and Italy have both defaulted, Spain has a couple to its name, and Turkey has a whole bunch of marks on its record. Greece has also had a pair of defaults.
I'm hardly looking to minimize the impact of a Greek default, particularly when it comes to the Greek economy in particular. Unavailability of financing will only exacerbate the problems that already exist there and sorting that out while also managing a messy currency transition would create an ugly scene.
But will this make for an apocalyptic scenario in the big picture? Simon Johnson has a piece on Huffington Post titled "The End of the Euro: A Survivor's Guide." Societe Generale has suggested a "disorderly" Greek exit could cut the Euro STOXX 50 in half.
Investors certainly seem concerned. The Dow Jones (INDEX: ^DJI) had dropped nearly 7% from early to mid-May largely on these eurozone concerns. The S&P 500 (INDEX: ^GSPC) fell closer to 8% over the same period -- a drop that rounds to nearly $1 trillion in value. That would suggest that global contagion will be pretty severe.
And even when we're talking about the Euro STOXX 50, we're talking about huge global companies like Anheuser-Busch (NYS: BUD) , ArcelorMittal (NYS: MT) , and Unilever (NYS: UL) that have at least as much, if not more, exposure to markets outside of Europe than in Europe itself. Business in Greece in particular is mostly a rounding error for companies like these.
Predicting the outcome of an event like this is wrought with challenges -- the primary one being that we're talking about forecasting the future. But if we step back and think about what this all means for the long term, would a Greek default be an event of cataclysmic proportions or just another sovereign default to throw up on the board with the collection of many other historical sovereign defaults?
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