Stiglitz: Fears Greece will go bust irrational February 2, 2010Posted by Yilan in Yunanistan.
Tags: Economy, Greece, Yunanistan
// The euro zone is not at risk of disintegrating because of the fiscal and debt strains currently troubling some of its member countries, Nobel laureate economist Joseph Stiglitz said on Tuesday.
Financial markets have hammered Greece for weeks, driving the premium demanded for holding its debt rather than German bunds to a euro lifetime high of around 405 basis points last week, on fears over the country’s budget hole and debt load.
Greek officials have warned that after Greece, other countries like Spain and Portugal may come under speculative pressure because of their fiscal difficulties.
“The answer (on euro coming apart) is no and the reason is that the European project has been a success and mutually beneficial to everyone. Therefore, everybody has a stake in seeing the system working. When there is a will, there is a way,” Stiglitz told Reuters in an interview at the sidelines of an economic conference in the Greek capital.
He said fears that Greece would go bust were irrational.
“Over the long run it is inevitable that Europe will have to address the problems that the crisis has brought out, that’s inevitable. Whether in the short run assistance is needed in the case of Greece and whether it can be done is not so clear,” he said.
Greece said on Tuesday its fiscal troubles were part of a wider euro zone problem and that a joint euro bond could be one way out of the crisis.
Seen as a weak link in the 16-nation currency club, Greece’s ballooning deficit and debt have reverberated across the group, exerting pressure on the euro and bond prices and prompting speculation of a bailout plan, which European Union officials have denied.
Stiglitz, who teaches at Columbia University and was chief economist at the World Bank in the past, said there were many ways of possible assistance that could help countries coming under speculative attack or facing fiscal difficulties.
“For example, in the case of speculative attack, an announcement that Europe will stand by Greece or Spain would not require any money. It just requires a statement of solidarity,” he said.