Easter read (2) | Two years digging an empty grave for the euro

Many economists and the Anglo-Saxon financial gurus have been killing the euro month after month since early 2010. But, even if their doomsday predictions have miserably failed so far, their negative influence over the markets can not be neglected.

By Fernando Barciela, in Madrid | PART 1 | We heard Noel Roubini prophesying the end of the euro early in 2010 at the World Economic Forum in Davos, Switzerland, in a somewhat evanescent fashion (“an increasing risk and an approaching debacle”), a forecast whose details gave away four months later, in May at a conference in Los Angeles, when he challengingly said that “the days of the euro are numbered. In a few days it will cease to exist.” This opinion, he explained, was not exactly based on his expertise and financial foresight but on the evidence provided by the Greek crisis and the Spanish looming default.

The euro did not die then. Yet Roubini, a professor at the University of New York and now flamboyant president of his consulting firm Roubini Global Economics, kept month after month singing those apocalyptic predictions that have earned him the nickname by which he is universally known, Dr. Doom, first awarded to him when he envisioned the collapse of the U.S. mortgage market. In late October he said that unless “Europe is preparing a two-trillion euro bazooka,  the final outcome will be worse than Lehman Brothers’.” For days, like the old biblical prophets, he put on CNBC interviews a date for the end of the world, the euro. “It will happen in 2013,” he said.

Nobel laureate Paul Krugman hasn’t failed either to distinguish himself as one of the finest swords of that battalion of economists committed to announce the very likely collapse of the single European currency. More moderate than his colleagues, the Princeton professor and columnist for the New York Times, critical of the policies followed in Europe to overcome the debt crisis, has tried to refrain from putting expiry dates on the euro. Even so he too, in September, proclaimed that “the euro is at risk of imminent collapse.”

The list is endless and includes, in addition to journalists and economists, former politicians, financiers, entrepreneurs… people like George Soros, who blames the ECB policies and Chancellor Angela Merkel, or Jed Babbin, former vice-secretary of Defence during the first Bush administration and currently a radio commentator and writer for magazines like National Review and The American Spectator.

Very popular in his country, Babbin sparked some controversy when he published last July, in The American Spectator, a terrifying article marked by a geo-strategic vision that drew a picture of an Armageddon-like future, which awaits us Europeans.

Under the title ‘The collapse of Euro-Titanic‘, Babbin wrote that crowded into the euro zone, European nations are more like third-class passengers of the Titanic than free members of an economic union. Once Greece, Portugal, Spain, Italy and others are expelled from the euro zone, something that he sees happening in a rapid succession, the continent will face an era of social conflict and poverty that could go on for several decades. Babbin warns that all this will cause riots and the fall of governments, a situation in which the only winner will be Russia… And the Germans? These, says Babbin, will be wise enough not to be interested in continuing to influence a Europe that, once the euro collapses, will have little or no economic interest to them.


About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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