TPG’s Bonderman Says Greece Needs Default on Sovereign Debt Like Argentina

Greece must default on its sovereign debt, following Argentina’s example, before it can emerge from the crisis now spreading through Europe, TPG Capital co-founder David Bonderman said today at a conference.

“Greece has to default,” Bonderman said during a panel discussion at The Economist’s Buttonwood Gathering in New York. “Argentina has shown you the way.”

Greece needs to “figure out a way to start collecting taxes,” and the rest of Europe must realize that Greeks have been living on “other people’s savings” for decades, said Bonderman, who founded the Fort Worth, Texas-based private- equity firm with Jim Coulter in 1992. As part of the European Union, Greece lacks its own central bank and currency to bail itself out.

Argentina’s government defaulted on $95 billion of debt after a 2001 run on banks contributed to the nation’s financial collapse. After shrinking 11 percent in 2002, Argentina’s economy expanded for eight consecutive years, with growth exceeding 8 percent in every year aside from 2008 and 2009.

European leaders met today in Brussels and reached agreement on a plan to recapitalize the continent’s banks, while talks continue on tackling the growing sovereign debt crisis.

Closely held TPG, which relies mostly on leveraged buyouts for revenue, oversees about $48 billion and owns companies including Neiman Marcus Group Inc. and Petco Animal Supplies Inc. The firm participated in some of the biggest deals of the LBO boom, including the record-setting purchase of power producer TXU Corp. for $43.2 billion in 2007, and the $30.7 billion 2008 takeover of Caesars Entertainment Corp., then known as Harrah’s, the world’s biggest casino company.

To contact the reporter on this story: Beth Jinks New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.