German Chancellor Angela Merkel should use Tuesday’s official trip to Athens to “recognize the euro is dead, and bury it,” veteran economist Roger Nightingale told CNBC.
Merkel’s first public trip to Greece since the eruption of the European debt crisis is viewed by some as a sign she wants the country to remain in the euro zone, despite its severe economic difficulties. (Read More: IMF, EU Clash Over Greece's Bailout Prospects.)
However, Nightingale, who is known for his ultra-bearish views, said monetary union had been a “terrible, disastrous mistake” and Merkel should use her visit as an opportunity to publicly say so.
Greece is braced for further strikes and potentially violent protests during Merkel’s visits, with labor unions and politicians eager to show their opposition to hefty austerity measures, which some Greeks view as imposed by Germany. (Read More: Snipers, Commandos to Welcome Merkel in Greece.)
“What I would recommend she do — and of course she won’t — is to recognize the euro is dead, and bury it. If you leave a body around after it dies, it smells and causes infection,” he said. “Start again, recognize you have made a terrible, disastrous mistake and actually start again.”
Nightingale added that the euro’s current strength should not be mistaken for a sign the single currency is thriving. He was responding to Silvia Wadhwa, CNBC’s veteran reporter at the European Central Bank, who said that as long as financial markets continue to back the euro, it is unlikely to be scrapped, irrespective of public opinion.
“The markets don’t often ask the people, or care about the people. … So far, the euro has been a damn good investment,” Wadhwa said. “The ECB’s OMT [Outright Monetary Transactions] program is a free lunch waiting for the markets, so I don’t see the euro going that fast I’m sorry to say.” (Read More: Is the ECB's New Program Too Late to Save Greece?)
“You can’t judge the viability of a currencyby its recent market rate. What you judge it by is whether the economy is stable,” Nightingale said. “In the weeks before the Argentine peso fell 60 percent, it was fairly stable.”
—By CNBC.com’s Katy Barnato