Greece should start an orderly default, voluntarily leave the euro zone and return to its former currency the drachma in order to avoid a “vicious cycle of insolvency, low competitiveness and ever-deepening depression,” economist Nouriel Roubini said in a column published in the Financial Times Monday.
Roubini, a professor at New York University’s Stern School of Business who gained renown for accurately calling the housing bubble, said other potential options for helping the debt-stricken country -- including a weakening of the euro, a reduction in Greek unit labor costs or a rapid deflation in prices and wages -- are impractical and likely won’t work.
The process of defaulting and leaving the euro zone would be “traumatic,” Roubini said, but “a return to a national currency and a sharp depreciation would quickly restore competitiveness and growth, as it did in Argentina and many other emerging markets which abandoned their currency pegs.”
Fears that Greece may default on its sovereign debt and leave the euro zone have grown in recent days. Euro zone countries are becoming frustrated that the nation appears unable to meet the fiscal targets set out under its international bailout…
Learn more at http://bottomline.msnbc.msn.com/_news/2011/09/19/7837211-nyus-roubini-greece-should-default-leave-euro
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