Nobel laureate and Princeton University economist Christopher Sims warns that the euro countries hit worst by the crisis may be looking for an exit from the failed currency experiment.
“If I were advising Greece, Portugal, and Spain, I would tell them to prepare contingency plans to leave the euro,” the 2011 Nobel Prize winner said.
Economist and Professor at Columbia University Joseph Stiglitz called the eurozone’s efforts to recover from the debt crisis a “dismal failure” in an interview with Bloomberg TV on the sidelines of a conference in Lindau, Germany
“Now we see the enormous price that Europe is paying,” Stiglitz said, adding, “hopefully the reality of this failed policy will strike.”
Stiglitz is especially critical of the European Central Bank's monetary policy which has done little to tackle deflation and continues to dither on changing interest rates.
In June, the central bank cut its main refinancing rate to 0.15 percent from 0.25 percent, and the deposit rate from zero to -.10 percent, the first time the ECB has seen a negative rate and the first time a major central bank has crossed the zero threshold.
Stiglitz also suggests the eurozone needs to speed up its creation of its banking union so debt can be borrowed on a mutual, and not individual, basis.
MIT Economics Professor Peter Diamond, who won the Nobel Prize in 2010 – warns that work may be more and more difficult to come by.
“It is a terrible outcome, and it is surprising how little uproar there has been over policies that are so stunningly destructive,” Diamond said.