Tags: Roubini | Europe | solvency

Roubini: Europe in Denial, Countries Are Insolvent

Tuesday, 20 Dec 2011 08:23 AM

European countries are not being honest with themselves over the level of solvency in some of their member countries, says New York University economist Nouriel Roubini.

Policymakers there and elsewhere need to address economic problems with greater urgency if they are serious about ending the financial crisis.

"The U.S. has postponed its fiscal consolidation and avoided the other structural reforms — investments in infrastructure, education and skills and changes to energy policy — that are required to restore its potential growth rate. The eurozone has been in denial of the fact that some of its member states are insolvent, as well as unable to survive and grow in a monetary union," Roubini writes in a Financial Times blog.
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"China has persisted in its weak currency, to support its export and investment-led growth model where savings are too high and consumption too low."

roubinin200.jpg
Nouriel Roubini
(Getty Images photo)
European policymakers, meanwhile, insist they will work through the crisis and prevent any country from defaulting and exiting the currency zone.

European Central Bank Vice President Vítor Constâncio says a breakup of the euro is out of the question.

"It's still absurd and unthinkable in many senses of the word," Constâncio tells CNBC.

"For people who really understand what it means to have a monetary union, it's really unmanageable and unthinkable."

Talk that Greece and Italy will give up fighting to stay in the eurozone and default on its debts has been roiling markets for a while now, Greece especially.

"Some people that seem to think about it or have the idea of preparing for it, they don’t know what they're talking about," Constâncio adds. "In my view, it's still not going to happen."

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European countries are not being honest with themselves over the level of solvency in some of their member countries, says New York University economist Nouriel Roubini. Policymakers there and elsewhere need to address economic problems with greater urgency if they are...
Roubini,Europe,solvency
1751
2011-23-20
Tuesday, 20 Dec 2011 08:23 AM
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