The profound divisions between northern and southern Europe is going to prevent any effort to reform The European Union, according to former Fed Chairman Alan Greenspan, who believes the Union will fail.
"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan told CNBC.
"Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."
Greenspan feels that, to a very large extent, what’s driving the United States at the moment is Europe. "Today, there is one single integrated global stock market," he said.
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