The Greek debt crisis is not on the official agenda at this week's G8 meeting, but it's certainly top of mind for policymakers gathering in Deauville, France.
"It is a fantasy and a folly" to believe a Greek debt restructuring can be avoided, says economist Peter Morici, a business professor at the University of Maryland. "Sooner or later Greece will have to restructure its debt."
Morici compares Greece to a homeowner who makes $100,000 a year but owes $1 million on a mortgage. "There's no debt extension that's going to work…other than writing down some of the debt," Morici says. "Sooner or later the Greek creditors…are going to have to take a big haircut."
Those creditors include German and French banks, which is why "this is a much a banking crisis as it is a sovereign debt crisis," he says. (See: A Greek Default Won't Be 'Contained', John Mauldin Says)
As a result, EU policymakers seem determined to kick the proverbial can down the road as far as possible, in order to 'buy time'Read More »from Peter Morici: “It’s Fantasy and Folly” to Believe Greek Restructuring Can Be Avoided