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Have certainly been teetering on the brink of financial disaster for much of this year only going back -- a last year despite calls to their leaders that all is well.
Remain calm them.
Investors remain nervous about economies like Ireland Greece Hungary and others.
Our next guest says not a matter of if but win the Euro currency will break apart.
Doesn't allotment as a resident fellow at the American enterprise institute and former IMF deputy director put -- -- no it on this last week when I read with keen interest doesn't welcome to the program.
Things yeah I hate to say it and you know mild ancestors the Irish and you know there are they going to be the ones that the break apart -- Yeah it looks like.
It's gonna be I -- the Irish or the creeks that -- gonna be the first to leave the -- of both of those countries have budget deficits.
Read about 14% of GDP they've lost a huge amount of competitiveness.
And they're real proper -- is that stock you put in the euros.
They've really can't get out of debt problems without the deepest of processions -- -- -- in the case of Ireland we've already seen I burdens.
GDP declined by something like 12% -- the lost two years we've seen unemployment up to 13%.
And yet -- deficit is still at 12% of GDP so what they gonna have to do is they gonna have to engage in separate budget cutting.
In order to try to bring that gets into balance but what that does is it just brought economy further into the ground.
And that complicates or all of their attempts to get it -- On to have more.
Sustainable basis indicate particular case -- you know what we looking at -- we looking at.
The off the moth of the massive housing bust that makes that -- the United States pale.
An S&P has calculated that the cost of that -- To the Irish government in terms of having to bailout the banks is gonna be something like anywhere between -- the end -- -- 8% of GDP so you know.
Either Ireland or Greece -- -- I think that it's a race between the two of them.
It -- -- it's just a matter of time before.
They -- -- is the political willingness.
To stick with these kind of austerity measures.
What if I think an Ireland leaves the -- drops the Euro do you still think.
That the Euro will continue to exist or do you think that it just implode.
No the hero my view is that -- -- will exist that's it you know if we look into three yes time.
You know what we gonna -- it's a bureau with the reduced number of members so what's the most likely scenario.
-- that we get the France's the Germany's the Benelux countries the strong north and European countries remaining in the Europe.
Whereas those like Portugal Greece Ireland Spain Italy.
That is property drop out of Europe the triple that if that we got Brady you know -- how this is gonna break.
Because the -- didn't include any except probation.
As to what occurs in the eventuality of breaking up so there's a lot of guesswork is going to be a huge amount of uncertainty.
And it -- view of what it means hey is this gonna be tremendous amount of Euro weakness.
You know I would see Europe going towards parity against the dollar the -- -- yes.
Yeah that is a while doesn't because you know listen the dollar -- a little bit of strength the last twelve months but you're still looking at what 30% premium on the Euro to the dollar.
And that you and I and -- talking about how the Euro.
May blow -- obviously people don't buy it or they would have already put the dollar back to parity with the Europe.
But what this isn't pretty unusual you know that it takes.
-- it's a little while to figure out.
I would say that the bond market understands this in the way in which they pricing the -- of Ireland and -- You know the -- -- Greece or something like 900 basis points the ones -- not about 400 basis points.
That -- -- -- pricing it at that is that apples if they didn't expect that there was as strong probability that those countries so all credit default once -- countries default then you know I think it's game mode.
For those countries continued membership in the Europe.
-- and in and around between now and some sort of resolution on the on the Euro where does that leave the US economy that's what.
You know not found -- -- that's what we're really care about a year.
Well it's not -- -- -- be good for the US you know from a variety of points -- -- you know what one needs a weaker dollar is not gonna.
-- touch it we could do wrote.
It's not gonna be good for United States exports if the European economy is weak that's not going to be good -- it.
The United States export but the main thing is that what we looking at -- is not so much the crisis in Europe's periphery.
As a crisis in the European banking system.
The European banks may need the French and German banks have -- -- that -- hundreds of billions of dollars.
To decrease of Ireland Portugal and Spain took the world so if we Garrett gets huge losses on those lost but -- as I expect we will.
That is bound to create -- banking crisis in the heart of Europe.
-- separate drive around the globe battling Kris -- -- -- much the same way as we sold that occur.
With us more housing crisis in the united state okay creating a global price.
-- we got to go very quickly will if one country default Ireland Greece Hungary whatever will it cause a chain reaction or can one go.
And the rest be preserved.
Now as soon as one goes with what that would do is -- the focus the markets full fury on the out that's because conceptually.
They're in exactly the same position very high budget deficits huge -- -- competitiveness.
And stuck with the need your road that that we can't cope with these problems -- -- see sprays -- out -- across Europe's periphery.
Interesting discussion -- -- thank you very much for joining us we appreciate it.
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