Tags: Roubini | Euro | Zone | Collapse

Roubini: Euro Zone Could Collapse Due to Greece, Spain

By    |   Tuesday, 02 Feb 2010 08:38 AM

Economist Nouriel Roubini says economic problems in euro zone members such as Greece and Spain could tear apart the European Monetary Union.

“Down the line, not this year or two years from now, we could have a breakup of the monetary union,” the New York University professor says.

Greece has a budget deficit that totals 12.7 percent of GDP, far above the 3 percent limit mandated by the European Union.

Meanwhile, Standard & Poor’s cut Spain’s credit rating outlook to negative, as its debt is expected to hit 67 percent of GDP this year.

“The euro zone could drift essentially to a bifurcation, with a strong center and a weaker periphery,” Roubini told Bloomberg.

“Eventually some countries might exit the monetary union. This is the very first test.”

Hedge fund icon George Soros isn’t quite as worried.

There is a “strong force” holding the euro zone together, he said at the World Economic Forum.

On another issue, Roubini told CNBC that central banks are between a rock and a hard place when it comes to monetary policy.

If they remove stimulus too soon, economic recovery may fizzle. But waiting too long risks an asset bubble.

"Exiting too soon is going to tip the economies into recession,” he said. “The trouble now is the beginning of an asset bubble that's becoming global."

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Economist Nouriel Roubini says economic problems in euro zone members such as Greece and Spain could tear apart the European Monetary Union. Down the line, not this year or two years from now, we could have a breakup of the monetary union, the New York University...
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Tuesday, 02 Feb 2010 08:38 AM
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