Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
One or more members will have to exit the euro zone to restore competitiveness
In his April 29 posting on this blog (The Greek Crisis Reveals the Fatal Weakness of the Euro and Gold Standard), my father pointed out that the euro fix ignores the underlying cause of the crisis, the trade deficits in Greece, Portugal and Spain.
Nouriel Roubini apparently understands this dimension of the crisis. In an interview with Bloomberg, he repeatedly predicted that within the next several years, one or more members of the euro zone would have to withdraw in order to restore their competitiveness. Here's the interview:
Overall, Roubini's analysis agrees with ours. The underlying debt problem stems from trade deficits. Transferring debt from the private to the public sector, without addressing the trade deficits, just makes the public sector insolvent.
Journal of Economic Literature:
Atlantic Economic Journal: