If Greece Quits The Euro, What Does Europe Need? Growth And Cash
Past that, Europe should consider replacing austerity policies with growth measures. In a separate note today, Goldman Sachs economist Lasse Nolboell W. Nielsen lay out a (convincing!) case for expanding an economy, not paring its parts.
Greater consolidation leads to greater overall economic deterioration, Nielsen says. A fixed exchange rate complicates the situation, removing the cushion on exports from a depreciating exchange rate. In general, a country should not look to cut any more than 3% to 4% of gross domestic product in the short term, Nielsen estimates. Spain expects to cut some 4.5% of GDP; Italy sees cuts amounting to 3.5% of GDP.
But longer term consolidation and cut backs, such as improving governance and constraining politicians' discretionary power, makes sense.
"Our research suggests that the challenge of achieving external and fiscal balance is very large in the Euro area," Nielsen says.And, yes, that's understating the situation. Reach Abram Brown at email@example.com. Or follow him @abebrown716.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV