Bloomberg News has the goods on this story:

Mario Blejer, who managed Argentina’s central bank in the aftermath of the world’s biggest sovereign default, said Greece should halt payments on its debt to stop a deterioration of the economy that threatens the European Union. “This debt is unpayable,” Blejer, who was also an adviser to Bank of England Governor Mervyn King from 2003 to 2008, said in an interview in Buenos Aires. “Greece should default, and default big. A small default is worse than a big default and also worse than no default.”

I don’t have a lot to add because the article says it all. But you know I think Greece needs to default too; austerity is going to end in recession/depression for Europe where everyone loses. The right thing to have happen is for Greece to default in a hard restructuring as part of a comprehensive credible plan. The goal is to right the ship by getting all of the biggest debtors within the Maastricht hurdle while recapitalising the financial sector. And that will mean restructuring and defaults. For Greece, the haircut would then have to be very large, perhaps 50%.

What’s the likelihood this will happen?