The Greek crisis has gone too far and the country would be better off exiting Europe's single currency area, Harvard Professor Martin Feldstein told CNBC.
Ratings agency Standard & Poor’s says there is now a one in three chance that Greece will abandon the euro and markets are waiting for the outcome of a fresh round of elections in Greece that take place on June 17.
“I think Greece is beyond repair,” Feldstein told "Worldwide Exchange."
“The best situation for Greece is to leave the euro zone, devalue a new currency, and be able therefore to grow again,” he said.
“Letting Greece go will be painful in the short run but will be better for Greece, and for Europe, in the long-run,” said Feldstein, who is also president emeritus of the U.S. National Bureau of Economic Research, and also served as chief economic advisor to President Ronald Reagan.
So was the entire euro project a mistake?
“It was a mistake the way it was constructed in the beginning,” Feldstein said. “The real question is – what do they do with the individual countries. The first thing to recognize is that the countries [in the euro zone] differ a lot … so there is no single fix for all of them.”
Feldstein doesn’t see nations working toward fiscal integration. Instead, he sees a temporary fix for Spanish banks propping up the system.
But, he warned, such a fix would not solve the underlying problem in Spain.
“The big problem for Spain is not a banking problem in the long-run. It is the individual regions,” Feldstein said. “They have fiscal independence that has allowed them to create large budget deficits, and that has to be controlled.”