Greenspan: the European Union is doomed to collapse

Greenspan: the European Union is doomed to collapse

Alan Greenspan said in an interview with CNBC that the European Union will collapse due to the large gap between the northern and southern countries.

“At the very beginning of the creation of the euro in 1999, it was expected that the southern eurozone economy would behave in the same way as in the north; the behavior of the Italians will be the same as that of the Germans. But this did not happen, ”says Greenspan. "Instead, Northern Europe began to pay for excessive consumption of Southern Europe, that is, to cover its deficits."

“The effect of cultural differences in the eurozone has been greatly underestimated,” he adds. “The only way to collect several countries under one currency is to select similar countries in a union, say, Germany, Holland and Austria. Otherwise it just won't work. ”

He also warned that the US could face a crisis in the bond market if Congress does not present a solution to the budget deficit.

He also said that he would also like to see how Congress solves the problem of budget revenues by abolishing state subsidies through tax breaks.

“The tax policy is for the most part not an increase in expenses, but tax benefits and other so-called“ tax expenses, ”he said. Markets, in theory, should react very little to the abolition of benefits, which will have almost no effect on economic activity. In this way, we could achieve a significant positive impact on the deficit, on the other hand, having a minimal negative impact on the economy. ”
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