Nouriel Roubini also believes in ‘Two Europes’ – Possible EU Split Up:
The Euro Crisis Takes On New Fervor: A quick rundown of Tory Capital Economics Analysis.
We’ve been on the forefront of changes in the euro zone and were one of the first sites devoted to economics – market analysis to forecast the possible breakup of the EU. The cultural and political differences make the region of PIIGS (Portugal, Italy, Ireland, Greece) a constant negative spillover to the core nations in Europe. To some degree, there are serious questions about the viability of a currency shared by different nations with various political will, spending habits and growth rates. Now, more economists are noting the possibility of a European breakup.
Nouriel Roubini, who is exceptionally bearish, believes the euro won’t survive. In a piece called “Down With The Euro” he notes the reflationary aspects of the region and forecasts that nations will slowly begin to exit the use of a common currency.
Here is a quick rundown of our thoughts in recent weeks about the possibility of a EU split.
“U.S. Stocks Rally Again on Euro Bank Optimism:” October 11, 2011
Dexia could be the beginning and not the end if investors don’t gravitate towards euro zone banks again within the next couple of weeks as Greek short term debt becomes due. Read more here
It’s a big week for economic data but will news from Europe take the lead? October 23, 2011
There is still a high likelihood (perhaps greater than 50 percent) that one European nation will default as cultural differences may be too great for a united solution that will please everyone and Arrows Impossibility theorem has notable relevance here -can’t please everyone. Read more here
“Greek Prime Minister to resign: The Political Economy of the Euro” November 6, 2011
It may be time to look seriously at what would happen if the euro wasn’t a common currency for all 17 nations. The political fallout from Panpandreou could cause other leaders to feel like – the euro isn’t worth it. Read more here
“Two Europes: Is splitting up the EU on the table?” November 11, 2011
Splitting up the EU wouldn’t be the end of Europe and could prove advantageous if “unbundling effects” occur where nations that are growing are not held back by regional spillovers effects from countries growing at a slower pace. This could be the beginning of a new outlook on the EU and perhaps the euro as a common currency. Read more here
“Down with the Eurozone” Nouriel Roubini November 11, 2011
The recent chaos in Greece and Italy may be the first step in this process. Clearly, the eurozone’s muddle-through approach no longer works. Unless the eurozone moves toward greater economic, fiscal, and political integration (on a path consistent with short-term restoration of growth, competitiveness, and debt sustainability, which are needed to resolve unsustainable debt and reduce chronic fiscal and external deficits), recessionary deflation will certainly lead to a disorderly break-up.
With Italy too big to fail, too big to save, and now at the point of no return, the endgame for the eurozone has begun. Sequential, coercive restructurings of debt will come first, and then exits from the monetary union that will eventually lead to the eurozone’s disintegration. Read Nouriel Roubini’s article here: