Default big, default often September 16, 2011 at 7:44 am

Mario Blejer, a former Bank of England adviser who took charge of Argentina’s central bank after the 2001 default, has been reported on Bloomberg:

Greece should default, and default big,… Germany and France will have to bear the brunt of financing efforts to help Greece and other countries that default re-start their economies, he said.

For what it is worth, he has an interesting point. If default is inevitable, then get it out of the way, and then you can start to grow again. Clearly the lower recovery you give, the more debts are extinguished, and hence the better your chances of recovering. Sadly we have moved from ‘if’ to ‘when’ so my sense is that Blejer is right; an early default would actually allow us to move on from the Euro tragedy that is unfolding. (That’s a German word, right, Eurotragik?)

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