Mario Blejer, who managed Argentina's central bank after the country defaulted on its sovereign debt, said Tuesday that Greece should also walk away from its bills. The former advisor to Bank of England governor Mervyn King from 2003-2008 said it was the only way for Greece to stop its economy from deteriorating further.
In a Bloomberg report, Blejer said, "This debt is unpayable. Greece should default, and default big. A small default is worse than a big default and also worse than no default." Rescue programs devised by the International Monetary Fund and the European Central Bank, he said, are "recession-creating" and will leave Greece with even more debt in relation to the size of its economy, choking off growth.
Blejer characterized the current measures taken to contain the debt crisis as "totally ridiculous." He added, "If you assume that these countries do everything that is in the program, they do all these adjustments and privatizations, at the end of 2012 debt-to-GDP will be bigger than this year."
His comments are in direct opposition to German Chancellor Angela Merkel, who has said that a Greek default would lead to a "domino effect" throughout the euro zone and that an "uncontrolled insolvency" would cause a market disaster.
