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Allowing controlled default, which would inflict losses on investors, would be a valuable lesson that foolish lending has consequences.
A combination of such supply-side changes with the option of controlled default in extreme cases isn't just the best way of handling the current difficulties.
While the global growth problems cannot be solved easily, "the problem of Greece could be solved either by having a controlled default or bailing it out", he argued on the BBC's Today programme.
"[This] is a temporary agreement of controlled default for Greece in the eurozone … and uncontrolled bankruptcy of its people," said Aleka Papariga, the party's leader on the draconian cuts and structural reforms envisaged in the accord.
This requires a controlled default of insolvent governments which, so far, means Greece and the protection of solvent governments by a pledge to buy as many of their bonds as it takes to ward off market panic.
American policymakers will be acutely aware that there is almost no appetite anywhere else, except Britain, for breaking up banks.The alternative is to find ways to allow a controlled default of part of banks' balance-sheets.
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In April company he controls defaulted on $525 million debt held against Texas Rangers (baseball) and Dallas Stars (hockey); Rangers said to be for sale.
In fact, Indian banks have been performing better in controlling defaults with only 0.6% of loans handed out last year turning sticky, compared to 1% in the U.S. and China.
"The appropriate course is for Greece (and perhaps others) to have as controlled a default as possible and to exit from the Euro.
Over-fitting was controlled using default regularization multiplier of 1.
Spots that passed the quality controls (default settings), together with visual inspection, were analyzed using GeneSpring 6.1 (Silicon Genetics).
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com