Tags: mark | mobius | europe | greek

Mobius: Greek Default Is Best Option for Europe

Thursday, 29 Apr 2010 09:09 AM

European countries should not bail out debt-stricken Greece but should rather let the Mediterranean country default, which would benefit everyone on the continent, says emerging markets guru Mark Mobius.

Greece should consider restructuring its debt to pay up to 50 cents for every dollar, which would slash its debt level to a more sustainable level, Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Assets Management tells Bloomberg.

A bailout for Greece, however, could prompt other indebted European countries to seek similar aid, which would damage the European Union economy.

“A default will help to plug the leak,” says Mobius. “A bailout at this stage does not make sense to me.”

The European Union limits member countries from running fiscal deficits over 3 percent of gross domestic product although Greece has seen its deficit widen above 12 percent, while Greek Prime Minister George Papandreou’s government has endured criticism from opposition parties and threats to strike by unions who are opposed to spending cuts.

Mobius, however, says Greece needs to clean up its affairs internally.

“The Greeks are rich. If you look at what happened during the Olympics, they raised $10 billion and there are only 10 million people,” Mobius said.

“The problem is that they don’t want to pay taxes because the government is not serving them well. Corruption is rife, government workers sleep on the job and this has to be corrected.”

European Union countries are mulling ways to aid Greece, with Germany seen lending the most support.

European Central Bank President Jean-Claude Trichet recently urged Germany to approve a rescue package for Greece.

“A fast parliamentary procedure” in Germany on the Greek package is “highly recommended in the present circumstances,” says Trichet, according to Reuters.

“What we need most at this time is a strong sense of direction. We need a sense of direction that can guide us on how we can emerge from these turbulent events.”

© 2015 Newsmax Finance. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved