“Though it seems unlikely given the current mood in the financial markets, it may be that in 10 years’ time we will look back on the current turmoil in the eurozone as being a lot of excitement and effort being applied to solve the wrong problem.
This is not to downplay the dangers of a Greek sovereign default – though I am perhaps less stressed by the idea than some, given that defaults happen somewhere or another in this world on a fairly regular basis.
Indeed, according to respected economists Carmen M Reinhart and Kenneth S Rogoff in their best-selling book This Time Is Different, there have been some 200 sovereign defaults in the last 200 years.
No doubt most seemed traumatic at the time, though people barely remember even the traumas of 30 years ago when Brazil, Mexico and Argentine hit the buffers. Neither does it seems to have done them – nor Russia, which defaulted in 1998 – long-term harm.”