From the beginning of the Greek government's deficit woes, it was clear that the Greek emergency
had the potential to imperil the euro. Now, as the crisis reaches a
fever pitch, economists are evaluating just how hard of a hit the
Eurozone is likely to take. Could this be the end of the entire
currency? Or is there a way out?
- Euro's Got Major Issues
The euro--a monetary union without a political one--was poorly
conceived from the beginning, argues renowned currency speculator George Soros
in the Financial Times, echoing a common "euroskeptic" argument: "A
fully fledged currency requires both a central bank and a
Treasury." What if Europe rescues Greece? There's still the struggling
Spain, Italy, Portugal, and Ireland, he reminds readers. "Even if it
handles the current crisis, what about the next one?"
- So: Is the Euro Going to Flop? "The responses, of course, depend on who you ask," acknowledges Time's Bruce Crumley.
"However, it's clear that if levelheaded economic experts are even
pondering the viability of Europe's monetary union, the situation is
- Might Have a Chance if They Cut Greece Loose Harvard economist Martin Feldstein suggests Greece "take a Eurozone 'holiday,'" reinstating the drachma. "The European economic and monetary union is doubly flawed," he thinks, but "if European political leaders ... want to preserve the current system," the Greek switch may be their best bet.
- Might Have a Chance if They Reform the Whole System Business Insider's Vincent Fernando,
noting the reemergence of gloating euro skeptics, explains that "the
current European crisis is damning proof of their old argument that a
single currency isn't sustainable if it is shared by multiple different
nations each with independent economic policies." The solution? "The
United States of Europe"--a k a a system closer to that the American
states eventually adopted. This is, more or less, the solution advocated by
Princeton economist and New York Times columnist Paul Krugman.