Tags: Roubini | Europe | Runaway | Economies

Roubini: Europe Must Still Curb Runaway Economies

By    |   Monday, 10 May 2010 03:22 PM

The European Union's nearly $1 trillion rescue package doesn’t eliminate the need for European countries to restructure their fiscal policies, says New York University economist Nouriel Roubini.

Economies throughout the continent face massive debt burdens.

“While money is available now on the table, this money is conditional on all these countries doing fiscal adjustment and structural reform,” Roubini says.

“Whether they’ll be able to do it fast enough over time is going to be an open question.”

To clean up their finances, governments must impose fiscal austerity, including spending cuts and tax increases, Roubini told Bloomberg.

That in turn means reduced economic growth and hardship for citizens.

“In the short term, raising taxes and cutting spending is going to imply further recession and further deflationary pressures in the euro zone,” Roubini said.

Greece and other members of the euro zone will find it difficult to impose fiscal tightening and to restore competitiveness, Roubini says.

Europe has dithered for months, he notes.

“Now that we are on the verge of a precipice, they realized they had to pull resources together, act together, otherwise the risk was the collapse of the euro zone.”

Other developed nations are headed for the same fate of Greece, thanks to the promise of overly generous retirement and health benefits, says financial commentator Robert Samuelson.

“Virtually every advanced nation, including the United States, faces the same prospect,” he wrote in The Washington Post.

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The European Union's nearly $1 trillion rescue package doesn t eliminate the need for European countries to restructure their fiscal policies, says New York University economist Nouriel Roubini. Economies throughout the continent face massive debt burdens. While money is...
Roubini,Europe,Runaway,Economies
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2010-22-10
Monday, 10 May 2010 03:22 PM
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