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‘Market Duress’ Ahead?

Greece is back in the headlines in the wake of a visit by Germany's Angela Merkel . Here's how one expert sees the euro zone's troubles resolving.

Some call it the basket case of Europe. Others view it as the profligate problem child of the euro zone. Whatever your take on Greece, it's clear that the country's problems are far from simple.

That's too bad, because without a resolution to the Greek crisis, the problems could spread, says Michala Marcussen, global head of economics at Société Générale.

"The issue for Europe is broader than just Greece alone, " she told CNBC. "Europe has to recognize that we are seeing austerity traps that have developed in Greece" and in other troubled countries like Portugal and Spain, where tough spending cuts and tax hikes in those countries have made it harder for the economies to recover.

"If we imagine a Greek euro exit today, I think that the consequences for the rest of Europe would be very severe, " Marcussen says. "I do not think we are in a position to be able to manage that contagion."

So how to Marcussen see Greece's problems being resolved?

She says policymakers are gradually shifting their emphasis away from austerity and toward structural reforms, which she admires.

"Of course you have to have some austerity, but there is such a thing as too much austerity, " she says.

But it won't be easy to get those reforms going, according to Marcussen. "Markets will have to put more pressure on the government, " she says . "It's under the market duress that the governments actually advance, and unfortunately I think that's what we're heading for again."

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