Is the Euro Doomed?
Back to francs and Deutschmarks
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 grave indeed."
- 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.
This article is from the archive of our partner The Wire.