The recent debt crisis in Europe is ultimately good for the euro in that it weakens the currency from overvalued levels, says Goldman Sachs Chief Economist Jim O'Neill.
The euro has weakened 15 percent against the dollar this year on fears that the Greek fiscal crisis was going to spread and threaten other euro zone economies.
European leaders crafted a rescue package worth almost $1 trillion to prevent that from happening.
“People need to remember that for the past couple of years the euro’s been very expensive,” O’Neill tells Bloomberg.
Nevertheless, the euro’s recent slide indicates that the continent's economy is not out of the woods, “so, there needs to be something done by European policy makers to stabilize the euro in the near future,” says O'Neill.
“Of course what’s happening in Greece is a warning to everybody,” O'Neill says, adding that the EU rescue measures “were actually impressive in terms of a coordinated European response.”
While Greece, Spain and other countries work to trim their public spending, beneficiaries of government programs in those countries have held strikes to protest the austerity measures, with some going violent.
Greece is bracing for a fresh round of strikes and protests, with transport workers halting port and railway operations across the country.
“People are bleeding financially but they will participate in the strike,” says Ilias Vrettakos, a senior member of ADEDY, a large public-sector union in Greece, according to Reuters.
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