Greek non-contagion is German 'wishful thinking,' says Hayman Capital Management's Kyle Bass

By Saleha Mohsin

Germany is wrong in its contention that a Greek exit from the euro won't spread to other members of the currency bloc, Hayman Capital Management LP's Kyle Bass said.

"Germany is laying the ground rules for trying to comfort the financial community that if Greece goes, it's not going to infect the rest of the region," Bass said. "That's wishful thinking."

A report in Der Spiegel magazine this week said that German Chancellor Angela Merkel is ready to accept a Greek exit, a development it said Berlin sees as manageable if the opposition Syriza party wins. Michael Fuchs, a senior lawmaker from Merkel's party, said today political turmoil in Greece is no longer a threat to the wider stability of the euro area.

Speculation over Greece's future has roiled markets as the nation prepares to hold an election later this month. The opposition Syriza party is leading in polls on a pledge of ending the austerity policies imposed as a condition of Greece's two bailouts. Prime Minister Antonis Samaras has said a Syriza victory would lead to default and an exit from the euro.

"The situation in Europe has changed very much" since the height of the region's debt crisis, Fuchs said in an interview with Bloomberg Television. "Systemically they are not relevant any more, the Greek people, so I'm not afraid for any other country."

Greece will probably avoid exiting the euro as the troika administering the country's bailout will deem the risk too great, according to Bass.

Debt writedown?

"The EU, the ECB and the IMF will work with Greece and they're going to have to write off their debts, or some of their debts," Bass said today in an interview in Oslo. "I don't think Greece just...