Greece faces ‘real danger’ of disorderly default, Soros says

Page last updated at 03:54 GMT, Monday, November 7, 2011 - 08:54 EST

Business Week:

Greece faces the “real danger” of a disorderly default, which raises the specter of a run on banks in other countries, billionaire investor George Soros said.

Any Greek debt reduction “must be done in an orderly manner” and authorities need to ensure that Greek banks are “kept alive” and deposits are safe, Soros said in a speech in Budapest today.

“There’s a real danger of a disorderly default,” Soros said. “I’m not at all sure it’ll happen, but it’s a real danger.” Without support for the lenders, “you’re liable to have a run on the banks in other countries as well. That’s the danger of a meltdown.”

European leaders are grappling to keep Greek’s debt crisis from spreading to other countries like Spain or Italy. European authorities should use their rescue fund to buy Greek government bonds from the European Central Bank and the International Monetary Fund to give Greece a chance to “work its way out” of the crisis, Soros said.

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