Deputy PM/Treasurer Wayne Swan was in fine form today when he cut off Sky News’s Kieran Gilbert’s talk about a second global financial crisis (GFC):
I don’t like that sort of talk about a second GFC. Yes, there are challenges in Europe. Yes, the economy is soft in the United States, but our region remains strong. There is strong growth and there are strong fundamentals here. People can be confident they’re in the best place in the world here at the moment.
Swan is absolutely right (see transcript here). Greece is too small a player in the world economy for its troubles to cause another GFC, and I’m confident the EU and IMF will sort it out.
Regarding the other possible cause of GFC II, a potential US default, the US simply won’t default on its debt because it would suffer a massive loss of prestige and influence, at a time when it is worried about losing its hegemony to China. While there are definitely some crazies in US politics, there aren’t enough of them in positions of power in Washington to allow that to ever eventuate. So instead of talking about GFC II, as our former PM would say, it’s time for everyone to pop a Mogadon.