Bloomberg
Jan. 27 (Bloomberg) -- New York University Professor Nouriel Roubini said he’s never been more pessimistic about the future of European monetary union, saying Spain poses a looming threat to the euro region holding together.

“Down the line, not this year or two years from now, we could have a breakup of the monetary union,” Roubini said in a Bloomberg Radio interview from the World Economic Forum’s annual meeting in Davos, Switzerland. “It’s a rising risk.”

Roubini’s concern contrasts with the view of European Central Bank President Jean-Claude Trichet who said it’s “absurd” to imagine that the 16-nation euro area could splinter. Speculation of a breakup has mounted in financial markets as Greece struggles to cut the continent’s biggest budget deficit and countries from Spain to Ireland face rising debt burdens.

“The euro zone could drift essentially with a bifurcation, with a strong center and a weaker periphery and eventually some countries might exit the monetary union,” said Roubini, who predicted the recent financial crisis a year before it began. “This is the very first test” of the single currency bloc.
Economies including Spain and Greece are threatened by fiscal imbalances and declining competitiveness, Roubini said. Membership in the euro means they can no longer devalue the currency to export their way out of recession, he said.

Commission Deadline

The Greek budget deficit ran more than four times the European Union limit of 3 percent of gross domestic product last year and Greece is one of 13 nations facing deadlines from the European Commission to cut its shortfall. The country’s debt is set to top 120 percent of GDP this year, the highest in the euro region and twice the limit for adopting the single currency.

Trichet on Jan. 14 dismissed as an “absurd hypothesis” the argument that Greece could be forced to exit the euro area. The country should remain in the union where its problems “will be unequivocally easier to solve,” central bank governor George Provopoulos said in the Financial Times on Jan. 22.

Roubini said for all the focus on Greece, Spain may eventually pose a bigger threat to the euro zone because it’s the region’s fourth-largest economy and has higher unemployment and weaker banks. Spain’s jobless rate is more than 19 percent, almost twice the EU average.

“If Greece goes under that’s a problem for the euro zone,” he said. “If Spain goes under it’s a disaster.”

Bond Vigilantes

Roubini described rising sovereign risk as a “new phenomenon” for advanced economies that will complicate their recoveries from the worst global recession since World War II.

So-called bond vigilantes, or investors who punish governments by dumping their debt, “have been asleep at the wheel,” outside of Europe, Roubini said. The risk premium investors demand to buy 10-year Greek debt over comparable German bonds rose to an 11-year high of 312 basis points on Jan. 22.

“Eventually they could wake up” in Japan and the U.S. and sell off their bonds as they did with Greece.

“We have a massive fiscal problems in most of the advanced economies, and we’re not really dealing with it,” he said.

After Standard & Poor’s yesterday lowered its sovereign credit rating outlook on Japan, Roubini said he was “worried” about the world’s second-largest economy as its debt mounts, deflation returns and population ages. While it can currently finance itself thanks to domestic savers, at some point they may “flee the yen,” pushing up borrowing costs and crippling the economy, he said.

To contact the reporter on this story: Simon Kennedy in Paris at kennedy4@bloomberg.net.

Está claro que estamos en la picota internacional dia sí dia también. Hemos comenzado el año frenéticamente y los acontecimientos que se han estado demorando durante el 2009 empiezan a desencadenarse uno tras otro.

Los publicistas del gobierno/pp deben estar echando humo de tanto pensar cómo hacernos pasar por el aro.


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Mientras tanto en la tv española...

Con todo, lo peor no es la crisis, ni el hecho de que al perder su soberania monetaria, Hispanistan no pueda devaluar para hacerle frente.

Lo peor es la absoluta y muy desmoralizante ausencia de un plan creible que reconozca adecuadamente la magnitud de la crisis y establezca un programa de medidas, no ya para salir del hoyo, sino por lo menos para afrontar la situacion.

ZP ha pasado de negar la crisis al yanosestamosrecuperandismo, y mientras tanto se pierde -se ha perdido ya- un tiempo precioso.

Bueno, no solo se pierde el tiempo, sino que al ayudar a los banquitos y cajitah, se esta transformando una deuda privada en publica, con lo que la losa que nos estan poniendo al cuello es cada vez mas pesada.

Es una catastrofe.

A camara lenta, pero un desastre.

¿Qué hace esto tan abajo? Up! Up! Y quién cojones le ha puesto sólo una estrella???

En todo caso, sería bueno fusionar este hilo con el que aparece aquí abajo:

Nouriel Roubini dice que España fuera del Euro


Saludos.

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