The Carlyle Group’s John Major says Greece must Default

Greece must default, says former PM Sir John Major

The former prime minister said the UK faced a “very, very serious” financial crisis

9 October 2011 Last updated at 11:35

Former Prime Minister Sir John Major has told the BBC that European banks need to recapitalise and “Greece needs to default” on its debts, to help bring an end to the eurozone debt crisis.

He said it would be “catastrophic” if the country defaulted before the banks had enough money to cover their losses.

Sir John also backed the decision by the Bank of England last week to pump more money into the UK economy.

He said the UK faced a “very, very serious” financial crisis.

Last Thursday, the Bank announced it would begin a fresh round of quantitative easing by injecting another £75bn into the economy, having pumped £200bn in during its first round.
Strong banks

The former conservative PM said it was “desirable to get a Greek default out of the way”.

A potential default was hanging over financial markets and was already expected by many investors, he said.

However, it was imperative that banks were strong enough to withstand any default, he added.

“If Greece defaulted and couldn’t pay its debts, all the Greek bonds that are held in other banking systems across Western Europe would suddenly have no value,” Sir John told the BBC’s Andrew Marr Show.

“You could as a knock on effect create a banking crisis in Western Europe… so that would be absolutely catastrophic if that happened.”

European leaders agreed proposals in July that included private lenders taking a hit in any Greek default. However, the cut of 21% proposed is now seen by many as insufficient, with reports suggesting leaders are now contemplating a 50% cut.

Sir John said Greece could default and remain in the eurozone. This could be achieved by granting the bloc’s bailout fund – the European Financial Stability Facility (EFSF) – a banking licence.

It could then borrow money from the European Central Bank to either buy Greek government bonds or recapitalise European banks, he said.

Whatever the outcome of the debt crisis, Sir John said it was “extremely unlikely the eurozone would fracture”.

He also highlighted the importance of the bloc to the UK, saying that 40% of UK exports went to the eurozone.

His comments come as French President Nicolas Sarkozy and German Chancellor Angela Merkel prepare to meet in Berlin to discuss the best way forward.

One comment

  • This is the same treasonous cretin who’s sold this Country out to the European Union whilst also selling off our main port for peanuts to Halliburton when he was Prime Minister. Why did he do this? He did it get a guaranteed cushy job with the Deutsche Verteidigungs Dienst’s, The Carlyle Group riddled with Knights of Malta. He was given a guaranteed one million pound a year job for life. Now he’s the head of the European division and he’s not as stupid as it seemed whilst he was the Prime Minister. This is a man who should have been in a lawful Common Law Court up for treason punishable by death. Note how Knight of Malta, Tony Blair and Dame of Malta, Elizabeth Mary II altered the death penalty part of the treason laws in 1998 to cover their backs for the destruction of England. Knight of Malta, George H.W. Bush will be fully backed up against the Euro and desperate for its fall. Make note that Jamie Dimon has a big interest in crippling Ireland who’re after his ass on derivative fraud just as Dominique Strauss-Kahn was before Dimon crippled him and replaced him with Lagarde. Remember Dimon dictates the orders to the President via DVD agent, Hillary Clinton on behalf of New Jerusalem. These swines by the way are bailing out themselves against the Greek losses and they’re doing it via Bank Leumi with Bank of America, JP Morgan and of course Mellon.

    -The Unhived Mind

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