Suspense: Will Greece default or not? and who will follow that example?

[Yo_Mama]

3. Greece will default

Italy will eventually have to default as well, although they probably have a few years with the unlimited three-year loans provided by the ECB. As to the rest, it's up in the air.

Greece really has defaulted already, since it cannot repay its debt and everyone has conceded that. The question is whether the private debt-writedowns will be handled as a "voluntary" transaction or an involuntary one. But even if the voluntary 50% private writedown happens, Greece will still default because the object of the plan (which is now more like a 75-80% writedown than a 50% writedown) is only to lower Greek debt to 120% of GDP by 2020. The Greeks can't possibly handle that level of debt.

It looks like Italy is going to 130% of GDP, and they won't recover after that.