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British economists urge Greece to default on its debts, abandon euro
On April 29, my father predicted on this blog that the Southern European countries would be forced to leave the euro zone. He wrote:
Nouriel Roubini was the next to make this claim. See my blog posting from May 12.
On May 29, in the American Thinker (The Euro: This Marriage Can't Be Saved), we repeated my father's prediction that Southern European governments would give up the euro, based upon their self-interest.
On May 30, Times On Line reported that British economists at the Centre for Economics and Business Research (CEBR) recommended that Greece give up the euro, based upon its own interest. Here's a selection from the report:
Speaking from Athens yesterday, Doug McWilliams, chief executive of the CEBR, said: “Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight. “
We are losing our edge. It used to be that we were several years ahead of the rest of the economics profession; now we are only weeks ahead!
Comment by CE, 6/28/2010:
Michael Pettis told me in 2003 that the euro would not survive the first serious global liquidity contraction. On his blog he says that Greece will default, and will get debt forgiveness, but not until European banks have had five or six years to rebuild their capital base.
Journal of Economic Literature:
Atlantic Economic Journal: