The euro needs to sink to parity with the US dollar in order to restore Europe’s peripheral economies to growth, Nouriel Roubini, the economist known as “Dr. Doom” for his bearish predictions, told CNBC Friday.
“The euro zone needs a real depreciation in the periphery to achieve the restoration of growth, external balance and competitiveness,” he said at the Ambrosetti Workshop on the shores of Lake Como, Italy. “The periphery needs to have the euro closer to parity with the US dollar.”
The euro has stayed at historically strong levels against the dollar despite the crisis in the euro zone.
Roubini added that markets are “schizophrenic” at the moment, as they cannot decide whether to reward or punish countries such as Spain and Italy for their austerity plans.
“There’s this vicious circle with the deficit that doing austerity makes the recession worse,” he said. “Without growth, the socio-political backlash will become overwhelming for some governments.”Page 1 of 3 | Next Page