Consequences of Eurozone Sovereign Debt Default

After the Second World War in connection with the potential for a
national Euro sovereign debt crisis and sovereign debt default, we
identify potential and positive consequences of such sovereign debt
crises and sovereign debt defaults. This history reveals that four
principle consequences have resulted from prior sovereign debt crises
and defaults. These are generally seen to be: first, lost national
reputation and reduced national borrowing capacity; second, the
exclusion of some national companies from trading in certain markets;
third, the impact on the domestic economy relating in particular to the
cost of imports; and lastly, the impact on political activity and socioeconomic
policy.
Reviewing the consequences of sovereign debt crisis and default post
1980, this paper considers the consequences of the current Euro-zone
sovereign debt crisis, the potential for default and its likely short and
long-term significance, as well as the potential for unexpected
consequences. The paper considers the likely magnitude of the output
losses and the human costs that will inevitably follow on the current
Euro-zone crisis. The Euro-zone has unique peculiarity because it is an
economy within the European Union economy so the possibility of
devaluation within the zone does not exist. The paper finds that there is
potential for both positive and negative impacts on the citizens of
Europe.