Six Euro Countries Would Fail Without Props
News Editor, CNBC.com
There are huge debt problems brewing in Europe, while the U.S. is facing the prospect of more job losses before the employment landscape shifts, Harvard economics professor Kenneth Rogoff said Thursday.
“If you took away the props of the (European Central Bank) and the (International Monetary Fund) half a dozen countries in Europe would fail tomorrow,” Rogoff told CNBC on the sidelines in Davos.
There’s no way that, following the banking crisis, that the next 10 years will go by without a sovereign debt crisis, he added.
Looking to specific problems, Greece may have to overreact to defend itself, and credibility will be essential, he said.
“It’s an important moment but if you look at history since Greece gained independence, since its existence, it has been in default for half those years,” Rogoff added.
In the U.S., hiring will likely kick in sometime this year, but “it is probably going to get worse before it gets better,” he told “Squawk Box Europe.”
“For the next two years we’re going to have high unemployment,” Rogoff said.