Mario Blejer: Greek Default Is Inevitable!

• Anyone who looks at the numbers knows that Greece will default. How will lending more money to Greece at an exorbitant interest rate help Greece? Will any sane banker lend you more money when you are bankrupt with no way of paying back? Obviously not! There is no bailout! Calling it a bailout as a deliberate lie to make it seem as though the Illuminist banksters are doing a good thing.
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• This is about the deliberate debt enslavement of Greece and then forcing them to sell away their national assets/treasures (at fire sale prices) to pay off their debts. Banksters who make bad loans knowingly to people who are not able to pay back should bear the consequences of their actions by writing off the debts. Illuminist bankster loan sharks are financially raping the Greeks with the help of corrupt Greek politicians! This is financial terrorism!
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  Mario Blejer: Greek Default Is Inevitable! 
  by Mario Blejer, www.MarketWatch.com 
  Commentary: Latin American lessons support restructuring debt
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  The European Central Bank, with its staunch opposition to sovereign debt restructuring in Europe, is making a bad situation worse. By threatening to withdraw support for banks in countries such as Greece if they restructure their debts, the ECB is practically inciting runs on banks.
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  The argument that Greek state paper could no longer be used as collateral in such cases hardly justifies such a potentially destabilizing step. The ECB is effectively the lender of last resort to such banks. If depositors believe it is about to pull out, then they will withdraw money from the banks — and we will face a self-fuelling downward spiral.
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  The debt problem of peripheral Europe is structural. It cannot be solved by piling debt on debt. There is an analogy to a Ponzi scheme, under which more money is continually paid in to keep the pyramid-like edifice from collapsing. The debt/GDP ratio increases over time because new loans are given to pay old debt and to finance the remaining fiscal gaps.
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  In addition, the share of the debt in official hands continues to increase and eventually taxpayers bear the complete cost of the adjustment. This may, however, take time and, since the pyramid is unstable, the construction could break down at any moment — a source of increasing uncertainty.
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  The International Monetary Fund so far has not performed well in peripheral Europe. It was a mistake to assume that a country like Greece can re-enter the private-sector credit markets next year. This is impossible. It is even more difficult after 2013 under the perverse permanent bailout scheme where protection for private-sector creditors is progressively lowered. Programs are based on illusory “debt sustainability scenarios” that ignore that they lead to recession where countries have no chance of outgrowing their debt.
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  As for privatization, this is a red herring. It is useful as a short-term stopgap and for improving productivity but a fire sale of assets cannot solve the debt problem. If there is no demand for Greek debt, then there cannot be too much demand for Greek equity.
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  The Argentine experience during the first decade of the 21st century is instructive. So are the broader lessons of the Latin American debt restructuring in the 1980s and also that of Mexico in 1994. Fiscal adjustment and structural reforms are crucial and necessary conditions, and privatization may play a small role, but there is no solution without debt relief, which means, without euphemisms, default. This should be nonconfrontational and as amicable as possible.
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  Collateralized new bonds (along the model of the Brady bonds initiative in the late 1980s) form the best procedure. This could be backed by direct liquidity and recapitalization actions for the creditor banks under similar conditions to the 2009 “Vienna model” successfully used for central and eastern Europe.
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  However, without significant write-downs of existing debt, there is no way out.
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  … for the full article click here!
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  Mario Blejer was president of the Central Bank of Argentina, and has held top positions at the International Monetary Fund, the World Bank and the Bank of England. This article originally appeared in the Bulletin of the Official Monetary and Financial Institutions Forum.

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