Periphery euro zone countries are seriously ill and will have to default on their debt at some point, Satyajit Das, a risk consultant and author of "Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives" told CNBC Thursday.
So far, the European Central Bank has treated the problem as a liquidity problem, but it will have to admit that the debt will not go away, Das said.
"This is like somebody with a disease, it's a major disease … they've got cancer, you've got to be honest about it," he said.
With governments implementing austerity programs, growth will not return to countries in the periphery of the euro zone such as Greece, Ireland, Spain and Portugal, he said.
"I think fundamentally the problem that they all have is that they know that the debt is not going to go away," he said.
"These countries don't have sufficient growth, they don't have a sufficient tax base, they will not be able to pay back this debt," Das added.
The ECB helped countries by buying their bonds in the secondary markets to support prices and providing funding to banks at attractive rates when they were not financed by money markets. Domestic banks then bought more government debt, offering it as collateral in the ECB's auctions, he noted.
"The illusion that the countries had access to commercial funding sources at reasonable rates was maintained," Das wrote in his research notes.
Default the Likely End Game
If the European Union does not agree to fiscal union or continuing support, pressures on the periphery countries may reach a tipping point, making default the likely end game, he wrote.
This would hit banks and may force governments in Germany, France and the UK to inject capital in their banks to ensure solvency, according to Das.
"The richer nations would still have to pay, but for the recapitalization of their banks rather than foreign countries," he wrote.
In the CNBC interview he gave the example of Iceland, which wrote down a lot of debt, let its banks go bankrupt and devalued the currency and is now setting the stage for growth.
By contrast, "Europe is now locking itself in this process of enormously stagnant overhang with its debt," he said.
A default by one of the periphery euro-zone countries will not affect the euro too badly, according to Das.
"Argentina defaulted in dollars, the dollar still went on. I don't think the fact that the Greeks or the Irish default will have much to do to the euro," he said.
Leaving the euro is the only option for weaker countries if they want to save their economies, Das added.
"I think these countries have a very simple choice: if they stay in the euro they die of asphyxiation," he said.