March 24 (Bloomberg) -- Greece will default on its bonds âat some pointâ as the euro region fails to deal its first major economic crisis, said Paul Donovan, deputy head of global economics at UBS Investment Bank. âI think itâs in an impossible situation,â said Donovan, who is based in London, in an interview with Bloomberg Radio today. âEurope has failed to clear its first serious hurdle. If Europe canât solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesnât work. Itâs a bad idea.â European governments have yet to agree on how to fund any rescue for Greece, which says it will struggle to pay its debts at current market interest rates. While Prime Minister George Papandreou announced a 4.8 billion euro ($6.4 billion) austerity package on March 3, the extra yield that investors demand to hold Greek debt over German counterparts has since risen. The spread was at 324 basis points today compared with 316 points at the start of the month. The euro fell 1 percent today to $1.3358, extending its decline this year to 6.7 percent. EU leaders meet in Brussels tomorrow after a week dominated by a split between Germany and France over whether the International Monetary Fund should pay for a bailout. Chancellor Angela Merkel says her voters shouldnât foot the bill for Greek excess, while French President Nicolas Sarkozy says Europe needs to show it can solve its own crises. Default âUnlikelyâ Greece is unlikely to default and there will now be a period of âmuddling through,â Marc Chandler, New York-based global head of currency strategy at Brown Brothers Harriman & Co., told Bloomberg Radio today. In a separate interview, Columbia University Professor Charles Calomiris said itâs not âinevitableâ Greece will default even though it needs to cut government spending by 25 percent. âA 25 percent reduction is something Iâve never seen in any country,â Calomiris said. âIt would require a huge lift.â A German finance official said yesterday that both countries may agree to involve the IMF. Papandreou said March 19 that Greece, which needs to sell about 10 billion euros ($13.4 billion) of bonds in coming weeks, is a step away from not being able to borrow and may need to turn to the IMF if European aid isnât forthcoming. Europeâs fiscal crisis shows the need for the euro region to create a common fiscal policy, former U.K. Chancellor of the Exchequer Norman Lamont said in an interview in London today. âThat would be the logical step,â Lamont said. âI donât think they are prepared to do that, and without doing that I think the euro is a contradiction, a currency without a state.â http://www.businessweek.com/news/20...ck-imf-greek-role-official-says-update1-.html
Things are getting pretty bad in Greece http://www.youtube.com/watch?v=DFsfOt-nXwg&feature=player_embedded#at=12
Here's to hoping that they go down, as crazy as it sounds I'd actually be quite interested in seeing what would happen if an entire country defaulted. Countries are so obsessed with protectionism right now that they never even consider what could happen if they just went ahead and took their losses like they should. What the Austrian economists lack is showing the world that defaulting would actually be a good thing for a country, if Greece ends up defaulting and actually recovers quicker than the other countries who are bailing everyone out then that would mean their arguments are proven right.