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Mario Blejer Got It Right On Greece

He said last year that Greece should default and default big. He was right. Greece dithered and negotiated and agreed to painful austerity measures in order to get a bailout.

And then they defaulted anyway.

Yesterday, ISDA announced a credit event on the Greek CDS's, which to the rest of us means that they officially defaulted.

Mario Blejer warned about this scenario last year and, I believe, got it exactly right.

He said that dithering and austerity measures will just hurt the economy, and that they should just do it and get it over with.

"Greece should default, and default big. A small default is worse than a big default and also worse than no default."

He also said that the rescue efforts would just create a recession in Greece and leave them with lots of debt and stifle growth.

Those people who bought CDS on the bonds are going to come out well ahead. The right call here was to simply buy CDS to hedge the credit risk and then insist on full payment.