Euro Strength Seen by Stiglitz Removing Greek Debt – Bloomberg 06-11-12

Salient to Investors:

Greece accounts for just 2.3 percent of EU GDP, and 4.3 percent of EU debt. Without Greece , the EU would have had a trade surplus in 2011.

Germany has posted a trade surplus every month since May 1991 and has avoided recession since 2009.

OECD says the euro is undervalued against 10 of 12 major counterparts.

Predictions:

Nobel laureate Joseph Stiglitz believes losing Greece will strengthen the EU, and expects the euro to rise.

Nomura Holdings’ Jens Nordvig sees a stronger and more stable monetary union if Greece exits if followed by additional integration – with the euro rising as much as 8 percent. But with no additional integration, capital flight would accelerate and the euro would drop significantly. A Greece exit wouldn’t greatly impact the remaining economies.

George Soros said European leaders have a three-month window to correct their mistakes and reverse current trends. He expects the euro to survive because a breakup would be devastating also for Germany.

Harvard’s Martin Feldstein believes a Greek exit would be chaos short-term, but allow Greece to devalue its new currency and return growth and employment.

Berenberg Bank’s Christian Schulz opposes a Greece exit, but if it happens then it is better for the other EU countries because they are more harmonized already.

Eaton Vance’s Michael Cirami said a Greek exit would lead to a stronger and more stable currency bloc in the medium to long-term.

Read the full article at http://www.bloomberg.com/news/2012-06-11/euro-strength-seen-by-stiglitz-removing-greek-debt.html