The eurozone is a slow-motion train wreck, Nouriel Roubini said, the telegraph.co.uk reports. “Countries – and not just Greece – are insolvent. I think Greece will leave the eurozone in the next 12 months, and Portugal after.” The New York University professor of economics was speaking at one of the final sessions of the World Economic Forum annual meeting in Davos. “There is a 50pc chance that the eurozone will break up in the next three to five years. This doesn’t look like a G20 world it looks like a G-Zero world because there is no agreement on global imbalances, how to change the international monetary system, international trade, banking regulation, on all the fundamental issues.”
The economist also warned that if the US and Iran went to war, oil prices would spike 50pc and there’ll be a global recession. “In the UK there is recession, even the US is not doing great, in India there’s a slowdown and they’re worried about that. In China, exports, infrastructure investment, real estate is slowing down, so there’ll be a significant slowdown in China this year,” he concluded.
Speaking in Davos, George Osborne warns that Europe has “just weeks to act” to save the eurozone as IMF chief Christine Lagarde counters by saying that no country is immune from the crisis. “The fact that we’re still, at the start of 2012, talking about Greece again is a sign that this problem has not been dealt with,” the Chancellor warned on Saturday.”
Despite this situation, European Central Bank president Mario Draghi said the euro-zone had made “outstanding” progress towards resolving the debt crisis as hopes grew for an imminent deal on Greece’s debt burden, according to kuwaittimes.net. US Treasury Secretary Timothy Geithner also praised Europe’s efforts to turn the corner, saying recent moves had bolstered the single currency’s credibility. Speaking at the Davos forum, Draghi said that many of the fundamentals which sparked the financial crisis four years ago had now been addressed although he did urge governments to act faster to put their battle plans into action. “The amount of progress is outstanding,” said Draghi. “If you compare today with even five months ago, the eurozone area is another world.”
Draghi said that the fiscal compact most European states are negotiating is crucial to efforts to resolve the crisis, praising governments’ willingness to give up sovereignty.