Nouriel Roubini, aka ‘Dr. Doom’, names variants of possible eurozone collapse

November 26 (profi-forex.us) – Nouriel Roubini, an American economist and a Nobel Prize winner in economics, became world-famous after forecasting the latest global economic crisis. His opinion is respected around the world. In his recent article published in The Financial Times, Mr. Roubini says the eurozone may collapse. Actually, this is not the first time Roubini warned the world of the forthcoming fate of the eurozone and its common currency. The American economist assumes that the current political and economic situation in Italy confirms his expectations. According to him, Italy will most likely have to return to the Italian Lira – its previous national currency – in order to curb the escalating debt crisis. Once Italy leaves the currency union, it will most likely result in a collapse of the entire eurozone. According to Masterforex-V Academy, Nouriel Roubini offers the following 4 scenarios for the eurozone: Symmetrical reflation: This is the best option for restoring growth and competitiveness of the eurozone’s periphery while undertaking necessary austerity measures and structural reforms. This implies significant easing of monetary policy by the European Central Bank, which can eventually depreciate the common European currency against other major currencies. That is why both Germany and the ECB oppose the idea. Recessionary reflation: It implies tough austerity policies. However, austerity and spending cuts lead to production cuts, at least in near-term perspective. In order to avoid the negative consequences of such  structural reforms and to improve the balance of trade it is necessary to depreciate the common currency. A default followed by a withdrawal from the eurozone: The common currency may survive if the sick peripheral eurozone economies go back to their national currencies – lira, drachma, peso etc. However, Euro will also suffer losses because the currencies of the former eurozone members will depreciate.  That will be the European variant of Lehman Brothers’ collapse, which caused the 2008-2009 global crisis. Peripheral eurozone economies: The EU leaders can try to ignore the economic problems seen in those debt-ridden peripheral eurozone economies. Theoretically, it is possible. However, this would be an extremely costly solution for other eurozone members like Germany and France. […]

Nouriel Roubini names variants of possible eurozone collapse