Post
Topic
Board Politics & Society
Re: Greece and the collapse of the global financial system
by
jaysabi
on 30/06/2015, 01:31:02 UTC
it will lose 80-90 billion but no, that wont crush germany. it is just more debt.

Care to explain why this will not crush the German economy? The German GDP is worth some €3 trillion, and the debts by Greee account for almost 3% of it. If Greece refuses to pay the debt to Germany, then 3% of the German GDP will vanish, in a matter of seconds. And considering the fact that the German GDP growth was just 1.6% in 2014, don't you think that this will start a recession in Germany?

Those debt numbers don't figure into GDP because GDP is just an aggregate value of transactions. If the money owed to Germany vanishes, it doesn't have anything to do with GDP, because that figure wasn't part of GDP in the first place. However, the consequences of a default could affect GDP if people stop spending out of fear and uncertainty. But that's not the same thing. The answer is that the debt default doesn't automatically translate into less GDP.