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Kicking Greece Out of Euro Is Not Rational: Fink

Jennifer Leigh Parker, |Writer, CNBC.com
Wednesday, 14 Sep 2011 | 9:45 AM ET

Trying to assess the global economic outlook, the Delivering Alpha conversation has naturally shifted to Europe, and most importantly —the Euro.

On how different the Euro will look in two years, Blackrock’s CEO Larry Fink responds:

Larry Fink
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Larry Fink

“The amount of money that is short in Europe.. is enormous. This is so different than in 2008-2009, because people are not buying sovereigns… Incrementalism has destabilized Europe.”

Yet, despite this grim outlook — the group ultimately expects a solution.

Fink adds, “We are going to find a solution in Europe, and Germany will have to play a substantial role. Greece is being highlighted right now – I don’t think it’s rational to spin off Greece out of the Euro. Greece’s liabilities are Euros and Swissies. They can’t just magically go back to the drachma. That’s where you have systemic risk.”

The prescription for Greece? Go slow. This is not a quick fix problem, from which Europe can easily avoid. The European Central Bank will need to invest a “huge amount” to stabilize the Eurozone, Fink concludes.

Delivering Alpha - presented by CNBC and Institutional Investor
Delivering Alpha - presented by CNBC and Institutional Investor

Bottom line, will Greece default?

Fink concludes: “That means every individual that has a Euro loan in Greece has to restructure. It is not that simple to allow Greece to default and move into the drachma.”