Is a Greek default inevitable?

Nervous investors are bracing for the day when Greece will be unable to make payments on its massive debt

A man walks past a shuttered store in Athens, Greece: The financially strapped country is trying to secure an $11 billion bailout to avoid defaulting on its massive debt.
(Image credit: REUTERS/John Kolesidis)

Greece is frantically trying to come up with money to make its debt payments, with help from other European nations. But more and more economists now believe that even with further austerity measures and bailouts, default might be inevitable. Is it really too late to pull Greece back from the precipice?

Yes. The challenge is saving the rest of Europe: "Greece will default, either now or in several months," says John Hussman at Hussman Funds. European leaders should be focusing on what they can do "to prevent contagion." It will be painful when Greece goes under, but it would be far worse if Italy or Spain defaulted. Both have high debt-to-GDP ratios, but for now there's no "credible risk" they'll default. The European Central Bank should continue buying their bonds to keep it that way.

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