Tags: Roubini | Sanchez | Euro | flaw

Roubini’s Sanchez: Euro’s Creators Knew It Was ‘Flawed’ From Start

Monday, 04 Jun 2012 11:21 AM

By Michelle Smith

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The architects of the European monetary union knew the euro was flawed, right from the very start, says Gina Sanchez, director of Roubini Global Economics.

“The architects of the European monetary union knew the euro as a concept was flawed, but the idea was, 'If there is enough political will, we can get past those flaws,'” Sanchez told CNBC.

“If you look back at what was said at the launch of the euro, the whole purpose really was to ensure continued peace,” Sanchez said.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

Beyond that, the euro was also designed to help make member countries be more competitive by creating a large bloc, which in many cases resulted in better interest rates.

But The Telegraph quoted German Chancellor Angela Merkel as saying “the freedom created by this situation wasn't exploited to improve long-term competitiveness. Instead the time was used to spend too much money in consumption and too little time in tackling reforms.”

Now, the eurozone is in trouble — a crisis which is threatening to spill beyond the region — but peddling unity has become more difficult.

The German Chancellor plays a key role in the handling of the crisis but she is often blasted for her resistance to proposed unified solutions. For example, she recently shot down the idea of joint debt sharing.

Bloomberg reported that Merkel said under no circumstances would she agree to Germany-backed euro bonds.

The European Commission also has called for a banking union, which would create an authority with the ability to interact with financial institutions without having to clear the actions with national governments.

According to the Associated Press, the banking union would have the power to force banks to heal their finances and also have access to a pool of money to rescue banks, lifting pressure off individual countries — like Spain — that are already strapped for cash.

This plan also faces opposition from the German government.

Germany is currently the largest contributor of bailout funds and the government is against the idea of allowing a central authority to run around Europe bailing out ailing banks.

The foundation upon which the eurozone was constructed seems to be crumbling.

“As it turns out, political will has fallen by the wayside,” Sanchez told CNBC.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.



© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Retype Email:
Country
Zip Code:
 
You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved