Some strong comments from an analyst at UK Standard Bank (via Bloomberg)
“We question the ability of countries like Ireland and Greece to grow out of the current crisis,” Steve Barrow, head of Group of 10 foreign-exchange strategy in London, wrote in a note today. “With interest-rate cuts, exchange-rate depreciation and significant fiscal support all off limits for these countries, it seems likely that bailouts, or even pullouts from EMU, are likely” before the end of 2010, he said.
If this really does happen — the first departures from the European Monetary Union since its inception — it’s hard to see that not being the chief economic story of the year. After all, there was once talk about the euro being a replacement for the dollar, and really, we haven’t heard anyone explain how this would work.
If people were worried about Dubai ripple effects, the effect of this would be way, way bigger.
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