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Tags: roubini | exit | greek | euro

Roubini: Orderly Greek Exit Needed to Save Euro

Thursday, 24 May 2012 08:13 AM EDT

Greece needs to be shown the door out of the eurozone in an orderly fashion in order to save the overall currency area, says New York University economist Nouriel Roubini.

Healthy countries such as Germany will continue to suffer as long as markets roil and the European economy drags on fears Greece will abandon the euro in a messy manner and pressure the larger Spain and other countries to follow suit.

"It is clear that six EU states — Greece, Italy, Portugal, Spain, Ireland and Cyprus — are in trouble, with too much public debt and low economic growth," Roubini told Astana Economic Forum in Kazakhstan, according to The National, a United Arab Emirates publication.

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown

"Even in Germany and other 'core' countries, growth is being affected, and I can only see the problem getting worse."

Greece will hold parliamentary elections on June 17, and fears are growing that enough leftist candidates will seize power and reject austerity measures, which would cut off the flow of bailout money and open the door to a Greek exit from the eurozone.

Previous Greek administrations agreed to belt-tightening measures such as layoffs and tax hikes to streamline the country's bloated public sector in exchange for bailout money.

Critics say such policies have obliterated the economy and destroyed prospects for growth, while supporters say that pain today leads to lasting recovery tomorrow.

"Bailout fatigue is setting in, and these countries will soon tire of having to keep giving handouts to countries on the periphery," Roubini says.

"It would be better if an orderly exit could be organized than trying to keep Greece in the euro zone. We have already seen social instability in the country and a run on its banks, and this can only get worse."

European leaders have said they want Greece to stick with the euro but are quietly making preparations should the country leave.

"I can't say that there has not been work done" on simulating a Greek exit, says French President Francois Hollande, according to the AFP newswire

"But if I started to talk publicly about the hypothesis of Greece leaving, that would mean sending a signal to Greece and to the markets," Hollande adds.

"I prefer to address the Greeks and say: France and Europe want you to stay in the eurozone."

Editor's Note: This Wasn’t an Accident — Experts Testify on Financial Meltdown


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Thursday, 24 May 2012 08:13 AM
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