The euro zone debt crisis has reached a critical level and has left the bloc with limited time to find a solution, Jim O’Neill, chairman at Goldman Sachs Asset Management, told CNBC on Wednesday.
“Two years maximum is my perception of the time the euro zone has left to survive in its current form, though the reality is probably far less than that. Markets being markets, we’ve unveiled a degree of speed with the Spanish and Italian bond yields and I can’t see us getting through the summer without some serious consequences,” O’Neill said on CNBC’s “Squawk Box.”
He added that the whole of the European Monetary Union (EMU) was slowly ceasing to function, as
“The EMU as created doesn’t work. It’s either a United States of Europe type thing or not, and they have to follow something to do with that,” he added.
“The pondering going on in the markets today, it would seem inevitable given the escalation of
O’Neill — who famously coined the term BRIC — Brazil, Russia, India, and China — to describe the stars of the emerging markets in the 1990s, said policymakers need to take a “United States of Europe” attitude to solving the
“All 17 leaders could get together and commit to a Eurobond some time in the future and hey presto, that would be the beginnings of a major resolution,” he added.
O’Neill admitted this was unlikely and policymakers would opt for their usual route of “muddling through,” saying their actions thus far were “not good enough.”
He added that the markets were now priced for “almost permanent disaster.”