So what if the worst does happen?
Fear of what lies ahead seems almost as debilitating as whatever financial Armageddon finally occurs. Given the limited understanding we have of the implications of a more-likely-than-not Greek default – what it would mean for the companies we work for and the incomes we depend on – then behaviour which at other times would appear merely quaint takes on an era-defining edge.
So, what do we think the effect of economic Armaggeddon would be?
How about a rerun of the worst economic slump of modern times in the UK? Perhaps a 10% fall in GDP? (And we\’ll use real GDP per capita just because).
Blimey, that takes us all the way back to 2002 in living standards.
OK, how about the worst that has happened outside of war in modern times? The US\’ 25% slump in the early 30s?
We\’re back to 1995 now.
Hell, let\’s really go for it. 50% of all economic activity stops dead in its tracks. This is like the effects of losing a war (although not as bad as happened to Germany in \’45 etc).
No, I\’m not saying it would be pretty or nice. That it wouldn\’t cause huge suffering and anguish. As Mr. Dillow points out, what actually happens is not that everyone loses 50%, but that 50% lose everything.
However, unless you think the crumbling of the euro really is going to be like Germany in 1945, Russia after the Civil War in 1921/22, then absolutely the worst that could possibly happen would be that living standards return to what they were the year I left school.
I\’m quite looking forward to it actually. I have this vague sense that I\’ll be able to get the birds again if it happens…..or doesn\’t it work that way?