Mohamed El-Erian, chief executive and co-chief investment officer of bond giant Pimco, said he bets Greece will default on its debt in three years.Greece is likely to default, and it will be to the country's and the European Union's benefits, said El-Erian, speaking at the Buttonwood Gathering in New York. Without an orderly restructuring, he said, Greece's economy could spiral into a lost decade of high unemployment and low growth as seen in Asia and Latin America in the past.
That is because the fiscal plan imposed by the International Monetary Fund and EU for Greece's bailout to adjust its debt to GDP ratio will require enormous growth sacrifices, and yet see the country's debt rise further into the future.
"Europe has shown its ability to make changes that people thought were not very likely," said El-Erian. He said it is in the region's interest for Greece to default "because the alternative doesn't promise growth and employment generation."
And in the opposite corner, wearing no trunks and having no credibility or skin in the game:
Deven Sharma, president of Standard & Poor's, said Greece will not default Monday. "I do not believe Greece will default," said Sharma, speaking at The Buttonwood Gathering in New York. "The design always was for there to be a collective solution" in the European Union, he said.
Hmmm, I personally think it makes tons of sense to default and, quite frankly, Greece has a history of it.
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