It would be better if policymakers let a disorderly default of Greece take place and recapitalized banks, an analyst told CNBC Wednesday.
"Policymakers need to force the issue now. It might be better to let Greece default in a disorderly manner, because policymakers would have more control over the banks than they would on Greece," said Patrick Armstrong, managing partner at Armstrong Investment Management.
Workers in Greece were preparing to strike on Wednesday in protest against the wave of austerity measures the government there has implemented in order to tackle its deficit. The Greek government announced earlier this week that it would be unable to meet the 2011 deficit targets set as a condition for its bailouts.
Even a disorderly default, Armstrong said, could be easier in the long run than repeated bailouts would be. The so-called “Troika”—the International Monetary Fund, European Central Bank and European Commission—has publicly stated it has not considered allowing a default to happen.
"The population is not contributing toward tax, there is no economic growth in the euro zone and Greece will not meet its target. As long as you can recapitalize the banks than that may be an easier scenario than continuing to bail out Greece forever," Armstrong added. (The Greek population complains very strenuously that it is, indeed, paying taxes, at levels barely manageable for some households.)
He said that a global “double-dip” recession or a repeat of 2008 can still be avoided.
"There are ways that this can get resolved by easing monetary policy, quantitative easing rom the ECB, lowering of interest rates from the ECB and there must be nominal economic growth. This is a solvable problem," he added.
John Silvia, chief economist at Wells Fargo, agreed that somehow the Europeans will manage to come up with a solution—though he appeared to disagree with Armstrong’s larger points.
"The European community will 'fudge' the numbers, they'll come up with something that will work over time. I don't see the euro failing and I don't see Greece defaulting," Silvia told CNBC.