‘Inevitable’ Greek Default Contagious, Feldstein Writes in FT

A Greek default is “inevitable,” and “the only question is when it will occur,” given the country’s debt-to-gross-domestic-product ratio of more than 150 percent, Harvard University Professor Martin Feldstein writes in the Financial Times.

“The current negotiations are really about postponing the inevitable default,” Feldstein writes, adding that a default now could trigger defaults by Portugal, Ireland and Spain.

The European Central Bank is “determined to avoid a default at this time” in order to give negotiators time to find a way to delay the contagion defaults “long enough for creditors to withstand the writedowns of bond values if Greece, Portugal and Ireland default simultaneously,” Feldstein writes. He served as an economic adviser during the administration of President Ronald Reagan.

To contact the reporter on this story: Blanche Gatt in London at bgatt@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net.