British Economists tell Greece to Default on Debt

This is good. Some British economists have told Greece to unilaterally switch their debt from being in Euros to being denominated in a new lower valued Greek currency. Obviously, borrowers can't just unilaterally change the currency that they are supposed to pay back their loans in. To do that is simply to default. For a country to do that means that others aren't going to lend Greece more money.

Speaking from Athens yesterday, Doug McWilliams, chief executive of the CEBR, said: “Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight.

“So part of the package of leaving the euro must be to convert the debt into the new domestic currency unilaterally.”

Greece’s departure from the euro would prove disastrous for German and French banks, to which it owes billions of euros.

McWilliams called the move “virtually inevitable” and said other members may follow.

“The only question is the timing,” he said. “The other issue is the extent of contagion. Spain would probably be forced to follow suit, and probably Portugal and Italy, though the Italian debt position is less serious.

“Could this be the last weekend of the single currency? Quite possibly, yes.” . . .