EU doomed: Greenspan


May that largely undemocratic thought experiment die quickly.

The European Union is doomed to fail because the divide between the northern and southern countries is just too great, former Fed Chairman Alan Greenspan told CNBC in a recent interview.

“At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t,” Greenspan said. “Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits.”

Greenspan predicts that as the south’s fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe’s standard of living will go down.

“The effect of the divergent cultures in the eurozone has been grossly underestimated,” he added. “The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work.”

There have also been a few reports floating around of Germany returning to the Deutschmark.

UPDATE

The unravelling:

A COMPREHENSIVE package to save the eurozone from collapse was unravelling today, putting the single currency once again at the mercy of the markets.

Silvio Berlusconi’s Italian government appeared days from disintegrating after a deadlock over austerity measures demanded by Europe raised the prospect of another ailing economy coming under siege.

Didn’t Treasurer of the Year, Wayne Swan, reckon he could help?

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    • Winston Smith
    • October 26th, 2011

    I’ve been seeing the Detschmark rumours of late, but also noticed they went back to ‘container loads of new currency being delivered to banks’ in 2010.

  1. Hi,
    Things are not getting better, it will be a very interesting few months ahead.

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