WHY THE EURO IS IN A LOT OF TROUBLE.
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As Greece prepares for an election on Sunday with great financial implications for the rest of Europe and the rest of the world, Peter Morici - economist and professor of business at the University of Maryland - says the present confusion in the eurozone is caused by a fundamental confusion.
SOT - Prof. Peter Morici, University of Maryland
"Unfortunately, the Europeans are confusing symbols with practicality. The euro is a symbol of a United Europe - but it's a symbol of a United Europe that really doesn't exist." (:10)
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What we're now seeing - Peter Morici believes - is the slow, painful, but in the end inevitable unraveling of the euro.
SOT - Prof. Peter Morici
"I don't think it's going to unravel all at once. If Greece leaves, that won't bring down the eurozone - because it's so small. And Greece would leave in a panic. Greek voters neither want austerity nor to leave the euro - those are mutually inconsistent positions. I'm betting they leave the euro. That won't break it - it's if Spain does, because Spain is so large. And if Spain goes, Italy will have to go, as well. They're together five percent of the global economy, about 25 percent of the European economy. It's too much for the eurozone to bear." (:29)
Professor Morici thinks that the euro was a bad idea in the first place.
SOT - Prof. Peter Morici
"Nations have currencies. The eurozone is not a nation. It doesn't have the capacity to tax and redistribute revenues the way Washington does. And they don't have centralized banking regulation and the ability to resolve troubled banks." (:14)
In the long run, he says, the nations of Europe - including Greece - will be better off going back to individual currencies.
SOT - Prof. Peter Morici
"There's no law that says Europe has to have a single currency to be prosperous. The European Union had free trade, the free movement of labor and capital. General economic integration with individual currencies - there's no reason why they can't return to that." (:13)
The Osgood File. I'll see you on the television come Sunday Morning on CBS. This is Charles Osgood on the CBS Radio Network. |
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