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Tags: Buiter | Greece | exit | euro

Citi’s Buiter: Greece Will Exit Euro, Its Currency Will Plunge

By    |   Thursday, 24 May 2012 12:40 PM

Citigroup Chief Economist Willem Buiter doesn’t see a pretty end to Greece’s financial crisis. He predicts the nation will leave the eurozone next year and that its new currency will immediately plummet 60 percent against the euro.

Greek elections are scheduled for Jun 17. The so-called troika of international lenders -- the European Union, the European Central Bank, and the International Monetary Fund -- is waiting to see the election results before deciding on whether to grant more aid.

Editor's Note: The Final Turning Predicted for America. See Proof.

"The elections will not produce a viable government that can follow the troika plan, leading to a stalemate between the Greek government and official creditors, and to the suspension of funding," Buiter writes in Citi's latest Global Economic Outlook, CNBC reports.

Greece’s need to print money to finance government spending will force it out of the eurozone, Buiter says. After the initial drop by the currency – perhaps to be named the drachma again – it will likely remain down 50 to 60 percent for the next five years, Buiter says.

Ironically, Greece’s pullout from the eurozone could benefit the country a lot more than staying in it. Greece will be able to boost government spending to help its economy, and the currency depreciation will make its exports more competitive.

Indeed, Buiter predicts that Greek GDP, after shrinking a massive 10 percent next year, will recover to 4 percent growth by 2015.

Editor's Note: The Final Turning Predicted for America. See Proof.



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Thursday, 24 May 2012 12:40 PM
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