Nouriel on Draghi’s Plan: It Could Weaken EUR in Longer Run
Nouriel speaks on Bloomberg about Mario Draghi’s bond-buying plan, the future of the euro and the Fed’s plans this week and ahead of the election.
4 Responses to “Nouriel on Draghi’s Plan: It Could Weaken EUR in Longer Run”
I dont see the weaking of the euro as a "bad". I see it as an opportunity for more exports. The "bubble" of the expensive euro should break.
Europe needs an immediate Marschal-Plan for jobs in the periphery (especially in Greece) and gradually this plan should include the rest of Europe. Europe could break apart from two things : The first one is if Greece (pushed by the extreme austerity measures of the last 3 years) exits and the domino starts. Europe at this point is "boiling" with high unemployment, foreclosures, euro-skepticism and social anger. If you wanna prevent the pressure-cooker from exploding, look for its weak-points (Greece and the periphery) and make sure you do some welding on these "edges". The 2nd most possible reason for a break-up is political instability which is a direct result of the economic crisis. Euro-gvmnts are coalition gvmnts that dont have the power to change things to the right direction. When you have one-too-many weak gvmnts, then the break-up will be almost inevitable.
Europe needs a financial plan and a political stability plan.
Just came back from a trip in Holland and what i saw really made me skeptical. One too many houses for sale from people who have lost their jobs and cant keep up with the mortage. The over-50's are not employable anymore (many of them have lost their jobs), taxes are at an all-time-high and people start moving to the cities to find jobs. Its like Greece 5-7 years ago.
I m not anxious that an organised country like Holland, would "loose the plot" like some Mediteranean-country would, but never-the-less an alarm sounded in me. Look at whats happening in the US. Its the end of the western-world as we know it. The greed of the last 40 years to produce cheaper and cheaper products while sending the jobs abroad, has totaly destroyed the middle classes all over. Now it will take years, as well as political AND corporate change of mentality to bring the jobs back.
Politicians will be the first to "go" for letting things get to this point.
To reverse the trend is to reverse 150 years of flight to the City. People will have to go back to agriculture and a life of daily toils for food and shelter. Simple. As long as the banks follow the cheapest labor around the world, many will be priced out of factory jobs. What else is left? Back to the farms is what. There simply are not enough factory jobs in a locality, for the locality to offer a meaningful future for the many.
The ECB like their Soviet predecessors will try to keep the Euro overvalued. Even if the Euro does eventually weaken, which is likely as Nouriel points out; then any relief from exports is going to come very late in the day. Further this devaluatin will do little to do anything to readjust the gross internal disparities in the Eurozone between the core and the periphery since Germany is not showing any desire to change its export model nor its policies on this matter, which is their main motive to be part of the Eurozone system. Without this, Germany carries only liabilities and so they would have every reason to leave the system and go back to their own currency, leaving the liabilities on the rest of the hapless EZ members.