Tags: Krugman 50-50 Chance Greece May Ditch Euro

Krugman: 50-50 Chance Greece May Ditch Euro

Thursday, 27 Jan 2011 07:48 AM

There is a 50 percent chance Greece could abandon the euro, says Nobel economist Paul Krugman.

European political and monetary policy authorities are working with Greece and other nations to improve their economies in order to keep them with the currency.

But it might not work out.

"There's a possibility that one or more countries may resort to being forced off the euro," Krugman tells NPR.

"I think it's about 50 percent odds for Greece and lower for the others, although if one goes there might be a chain reaction here."

The problem with a shared currency is that while it facilitates doing business among member countries, having one takes away economic flexibility and room to maneuver an economy out of harm when trouble arises.

"The European Union, for the past 60 years, has been in a process of ever-greater integration, ever-greater progress toward the idea of Europe as a single democratic entity as opposed to a bunch of quarreling countries," Krugman says.

"And now all of that is in danger."

Financial and economic problems have bruised economies in Greece as well as in Spain, Ireland, Italy, Portugal.

Belgium is now said to be joining the unfortunate list.

A Bloomberg poll of global investors finds that either Greece or Ireland will default within five years and that at least one country will abandon the euro during that time.

"The problems in Europe have been addressed, but only with a band aid," Ted Jarvis, senior vice president at the Indiana Trust Company in Anderson, Indiana, tells Bloomberg.

"Several euro members have not followed the correct policies and dug themselves a deep hole."

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There is a 50 percent chance Greece could abandon the euro, says Nobel economist Paul Krugman. European political and monetary policy authorities are working with Greece and other nations to improve their economies in order to keep them with the currency. But it might not...
Krugman 50-50 Chance Greece May Ditch Euro
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2011-48-27
Thursday, 27 Jan 2011 07:48 AM
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