New York Times
June 19, 2011
European policy makers are caught in the "default" trap. They realize that Greece’s debt is unsustainable, and that Greece is actually much worse than Argentina was 10 years ago. But they fear the consequences of the kind of disorderly default that happened to Argentina. So they just keep on financing Greece as the lesser evil of options.
But disorderly default or further bailouts are not the only alternatives. Instead, one should take advantage of the current low prices of Greek debt to go for a market-based debt reduction. This could work in the following way:
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