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polarlis @ 2011-01-08T00: 58:00

with euro all over Europe

hides its head in the sand, refusing to acknowledge that is sick, says in an article in Foreign Policy, Charles Kalomiris, a professor at Columbia University and researcher at the National Bureau of Economic Research USA.

"Although the economic crisis has shed light on the difficult future of the eurozone, EU leaders are still trying to save the current state of affairs. In this situation, several countries will surely be forced in the next year or two to abandon the euro "- the author writes. The collapse of the euro is due to simple arithmetic:" barely rate public debt / GDP ratio in a country reaches a certain point, the country in the future will not be able to collect enough taxes to repay existing debt and interest on loans. "This week, the situation in another country - Portugal - has become dangerous to the stability of the euro.

European politicians argue that to leave Euro-zone is impossible because of the legal mechanism for this does not exist. But, in my opinion, for countries with unsustainable debt burdens have only one output - to default on their debt denominated in euro and to withdraw from the eurozone to continue to repay the fiscal deficits by printing their own money. On view Kalamarisa, now teetering on the brink of a precipice as "peripheral" Greece, Ireland, Portugal, and the big economies - Germany, Italy and France. In the next two years, several peripheral countries and at least one major leave the eurozone, he predicted. The most likely candidate - Greece, whose debt will soon reach 150% of GDP, it comes on the heels of Ireland, where the bubble burst in real estate and banks suffered greatly.

"The case of Ireland demonstrates as harmful interference with the EU ", - says the author. European partners forced Ireland to guarantee huge debt of banks and the country's debt rose to astronomical levels. Now this same fatal error being pushed Spain. Italy unlikely to hold out in the euro area: the political fragmentation does not allow her to take austerity measures, I am sure the author.

"partial collapse of the euro is inevitable, and European leaders should think about the next step - how to lay the foundations for a lasting monetary union for the future when the country left the euro area will recover and be able to return to it "- the author writes. Credit Union will not be saved unless you create a fiscal union, which would control costs centrally.

need to improve the competitiveness of South Europe, which, in the opinion of the author, suffers from rigid labor laws. The only way out - easier to fire workers and cutting back wages, reduce social spending, fight corruption, to remove barriers to foreign competitors. "In the eurozone Restored implementation these reforms must be one of the conditions of admission "- wrote Kalomiris.

in dire need of reform and European financial sector: a transparent recognition losses of the banking system would allow governments to put an end to the uncertainty in financial markets, the author notes.

Europe has a state and financial methods to create the foundation of a stable union. "But the question remains whether it has enough political will" - said in the conclusion of the article.

http://www.inopressa.ru/article/07Jan2011/foreignpolicy/euro.html