Difficult for Greece to grow with austerity measures: BGC

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The Greek bailout cannot possibly work, says David Buick, partner at BGC. In an exclusive interview to CNBC-TV18, Buick says that it will be difficult for the Greek economy to grow while complying with the austerity measures.

"I believe that if the default was to happen now or next year, it would be far less damaging than it would have been two years ago when the European Union was recovering from the banking crisis," he explained. Therefore, a default now would bruise a little, but it wouldn't be calamitous, he says.

He further says that the problems in Greece are not a reason for the equity market rally to face a hurdle.

Below is an edited transcript of his interview with Latha Venkatesh and Gautam Broker. Also watch the accompanying video.

Q: Cancelling the meet and conducting only a concall today indicates that chances of the passage of 130 billion euro bail out are slim. Is there any expectation in Europe that we could have a final decision this evening?

A: Certainly the omens don't look at all good. The fact that today's finance ministers meeting was cancelled clearly means that the finance ministers are clearly unhappy with the lack of what I call written confirmation that these austerity measures would be adhered to. There also seems to be a doubt of the excess 325 million euro worth of cuts which seem to be fundamental. Also, they want some kind of reassurance that if there is a change of government at the next elections they wouldn't change the rules on these austerity cuts. This seems to be not forthcoming at the moment.

I think you will find that for good order sake they probably will comply. But it still doesn't alter the fact that Greece in most peoples opinion will be unable to comply with these fiscal disciplines for an indefinite period of time and grow their economy and stop social unrest. It strikes me as an absolute impossibility, but obviously the European Union wants to hold the line to make sure that they deliver these things, but I think they would get so much more credit if there was a realization that this Greek bailout is really a non-go area. It just cannot possibly work. The Greek economy has got absolutely no chance of being able to deliver growth with those kinds of impediments and I just don't see it happening.

Also read: Does Germany want Greece to default?

Q: Risky assets, emerging markets like India as well as commodities are going on regardless of the tiff between Greece and the European Union. Should one brace for an accident or default at all?

A: I think that people in emerging markets should crack on. I am not saying forget Greece, but you need to put it in perspective. It is 3% of growth in the entire European Union and I believe that if the default were to happen now or next year it would be far less damaging than it would have been two years ago when it was recovering from the banking crisis. Banks would have taken or made contingency plans for the fact that there would be a default.

So if a default came, it would be bruising and hurtful, but not calamitous. Therefore I can see so much good economic data beginning to emerge from various parts of the world and I think people should react with their investment plans on that basis, not on one little pin fall or boil or whatever you call it. We should not wreck progress.