Greece Must Default Totally to Assure the Markets, Ngaire Woods Tells the FT

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In a letter to the Financial Times, Ngaire Woods addresses the Greek crisis, arguing that Greece must must default thoroughly, so as to assure the markets that no further default is likely. She writes:

‘Sir, Well-meaning friends can be perilous. Intervention by the International Monetary Fund and the European Union has staved off Greek default, for the time being. Over a decade ago the IMF intervened in Argentina, providing a $15bn “blindage” or shield against the markets. The result was to postpone Argentina’s inevitable default and to increase the costs to Argentina.

Greece has just received the same. The package bails out banks holding Greek debt. It reflects an official view that, above all, default must be averted. But surely Greece must default…see the