Roubini: “In A Few Days Time, There Might Not Be A Eurozone For Us To Discuss”

Via Business InsiderReuters blogger – Felix Salmon writes up a Nouriel Roubini panel on “The Eurozone: Still One for All and All for One?”

Nouriel, of course, takes that kind of thinking to its logical conclusion, and kicked off the panel by announcing that it was just in time: “in a few days,” he said, “there might not be a eurozone for us to discuss.” There’s no way that Greece can implement the 10% spending cut it needs to do in order to stop its debt spiralling out of control at current interest rates — and even if it did, the economic effects would be disastrous.

Nouriel’s base case, then, is Argentina 2001: after all, Greece has a much higher debt-to-GDP ratio, much higher deficit-to-GDP ratio, and much higher current-account deficit than Argentina had back then. And if that’s the base case, there’s no way that Greek debt should be trading anywhere near its current levels.

Which is similar to what we said at the weekend.

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