Friday, January 13, 2012

Greece Should Default

Or at least threaten to. The part on this CNBC article where they say that Greek default would be worse than a deal for both the banks and Greece, is dubious at best and probably wrong. Greece defaulting would be bad, but it would be far better than a bad deal. For the banks (and for that matter the various countries that would have to bail them out as well), on the other hand, Greek default is a disaster, and even getting pennies on the euro is preferable (actually, there may be a higher threshold at which it doesn't matter, but that's impossible to know without knowing the banks' actual financial statuses).

The fact is that in the case of default, no matter how bad it may be for Greece, it would be worse for their creditors (banks, countries, citizens of those countries with money in those banks *cough* Germany *cough*). Austerity is destroying that country and its economy right now, so it's hard to imagine that default would actually be worse.

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