As Greek officials negotiate with their European counterparts to find a way out of the beleaguered nation's debt morass, star investor Wilbur Ross, chief executive of WL Ross & Co., sees a bit of hope for success. That's because the alternative would be so unpalatable.
The odds of Greece staying in the eurozone are 60 percent, he told CNBC
. If Greece abandoned the euro, that would mean a return to the drachma.
"The drachma-ization would be terrible for the whole country, including for the banks," because euros in foreign accounts and "under mattresses" wouldn't come back into circulation," Ross said. "My guess is you would have the drachma trading somewhere between 25 cents to 50 cents on the euro. So it would be a pretty bad haircut for the people."
Ross thinks Greece will offer a debt restructuring proposal that can lead to an accord with its creditors. After all, Germany wants Greece to remain in the eurozone to avoid inviting other nations to exit, he said. And the Greek people and leaders also want to stay.
Nobel laureate economist Paul Krugman says Greece did the right thing in voting no on Sunday's referendum over the creditors' bailout plan. "Even the most ardent supporters of European union should be breathing a sigh of relief," he writes in The New York Times
Of course creditors don't see it that ways. "Their story is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice," Krugman says.
"But the campaign of bullying — the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office — was a shameful moment in a Europe that claims to believe in democratic principles."
Greece owes official lenders 243 billion euros ($268 billion) — mostly eurozone members, the European Central Bank and the IMF. It has several important payments due this month, including 3.5 billion euros in bond redemptions for securities held by the European Central Bank due July 20.
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