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Reply #57: Martin Feldstein: Only Italy can save the euro [View All]

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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 08:12 AM
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57. Martin Feldstein: Only Italy can save the euro
The euro currency may soon collapse even though there is no fundamental reason for it to fail. Everything depends on Italy, because financial markets now fear that it may be insolvent.

If the Italian government has to continue paying a seven or even eight per cent interest rate to finance its debt, the countrys total debt will grow faster than its annual output and therefore faster than its ability to service that debt.

If investors expect that to persist, they will stop lending to Italy. At that point, it will be forced to leave the euro. And if it does, the value of the new lira will reduce the price of Italian goods in general and Italian exports in particular. The resulting competitive pressure could then force France to leave the euro as well, bringing the monetary union to an end.

Read more >>
http://link.ft.com/r/ZE9K33/4CX7FR/K91WR/HYQFBE/SP66K4/...

"MARTY" FELDSTEIN IS THE AUTHOR OF THE CURRENT CRISIS--AND WHAT A JERK HE IS! NOTE THE AIG TIE-IN...

http://en.wikipedia.org/wiki/Martin_Feldstein
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