Euro breakup chances

I am interested to see that Professor Nouriel Roubini has now joined the debate regarding whether the Euro might break up.

Someone who has been following my lectures, broadcasts and writings may perhaps care to inform him that I have been consistently pointing out over the years that the Euro is a historically unprecedented and untested currency. It has escaped testing till now because of the artificially-induced boom into which the Euro was born. Now it is starting to face its first real test.

No one sensible builds in an unsound way or on unsound foundation. The Euro is a child of the same kind of thinking that produced the boom of the last couple of decades.

Dr. Roubini points out that Greece is merely a "problem" for the eurozone, because it is a very small economy. But what is bigger than a mere "problem" is Spain, the Eurozone's fourth-largest economy, which has an unemployment rate just shy of 20%, and a domestic banking system much weaker than that of Greece. "The eurozone could drift essentially with a bifurcation, with a strong center and a weaker periphery and eventually some countries might exit the monetary union", he opines.

This is the most positive possible outlook. It ignores how the market would respond to even the smallest country exiting the Euro. Further, it ignores the fact that the Euro has basically been paid for by the German taxpayer, and that it remains to be seen how long the German taxpayer has the ability and willingness to continue to fund this Frankensteinian creation. Well, I am being ungenerous. In spite of its defects-at-birth, the Euro has played a very positive role (not least for German industry). The question is: are we now at the start of the historical time-frame of its demise. Sphere: Related Content