These three things are true:
The likelihood that Greece would leave the eurozone, devalue its currency and repudiate its debts increased significantly after financial markets closed over the weekend.
The possibility of that event had sent tremors of fear through global financial markets from early 2010 through the middle of 2012, creating wild swings in stock and bond markets.
And on Monday, the market reaction to seeing Greece finally reach the edge of default was pretty quiet, as these things go. European stocks fell 3 percent. Spanish and Italian bonds fell, pushing rates in those countries up, but only to a mere 2.35 percent and 2.39 percent, respectively, for 10-year-bonds, very low by historical standards. The United States stock market is down a mere 0.6 percent.
In other words, financial markets are concerned, and think that the Greek crisis could damage the earnings of European companies and make investors a bit more wary of the debt of other Southern European countries. But they're not remotely betting that the situation will spin out of control and lead to a full-fledged unraveling of the eurozone or a recession across Europe.
That is in contrast with previous flash points in the Greek crisis, including May 2010; November 2010; July through December 2011; and May 2012, when each day's trading activity was a referendum on whether some catastrophic outcome had become more likely or less.
Consider that the Vix, a measure of expected future volatility in the United States stock market, rose 22 percent to 17.1 on Monday. That's a big increase in percentage terms, but in the summer of 2011, it bounced around between 16 and 43.
The question now is whether markets are right, or are being too sanguine.
Perhaps a Greek exit really won't be a big deal. There is little doubt that an economic catastrophe is underway for Greece itself and its 11 million citizens. The country's banks and stock market were closed Monday; an exchange-traded fund for Greek stocks that trades in New York was down by 15 percent.
The Latest Greek Crisis Isn't Generating Much Volatility
Market volatility ticked up after a Greek default became more likely over the weekend, but remained low.
But there really has been a remarkable amount of work done by European leaders to build the institutions and tools that will prevent a Greek exit from spiraling into something more dangerous. Since those panic days of a few years ago, the European Central Bank has pledged to intervene in markets on whatever scale necessary if there is a run on the debt of a eurozone country, and Europe has moved much closer to a truly unified continental banking system. Most Greek debt is now held by government and quasi-government entities, not by German and French banks.
So contagion doesn't have to happen. But here's an alternate theory.
The hedge funds and other investors who were betting on an unraveling of Europe because of the Greek crisis have lost a lot of money since 2012, as interventions by the E.C.B. ensured that bets against Spanish or Portuguese or Italian debt went unrewarded. Indeed, combined with activism by the Federal Reserve and other central banks, anyone who went "short" on global markets, betting on declines of stocks and other risky assets, has lost money for most of the last three years.
So just maybe the entities that would normally be betting that a Greek crisis would spiral into something more dangerous on Monday were out of the game, either gun-shy after the last few years or broke.
In other words, if you're an ordinary American or British or German citizen just hoping that whatever happens in Greece doesn't affect your economy, the best hope is that financial markets are being rational and farsighted, not narrow-minded and overly influenced by the recent past.
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