With borrowing costs for the euro zone’s peripheral nationsrising and a battle over growth versus austerity set to dominate politicians' attention, two leading contrarians have taken aim at the current policy response.
Nouriel Roubini, an economist and founder of RGE Monitor used a series of tweetson Tuesday evening to call for action on weakening the euro .
“If domestic demand is going to be anemic and weak in this fiscal adjustment because of private and public sector deleveraging you need net exports to improve to restore growth,” wrote Roubini who believes much looser monetary policy is needed.
“In order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy to help induce that nominal and real depreciation that is not occurring right now in the euro zone,” said Roubini.
“That’s one of the reasons why we’re getting a recession that’s even more severe,” he said.
During a debate on Tuesday, billionaire Investor George Soros made it clear what side of the growth versus austerity debatehe is on.
“Europe is similar to the Soviet Union in the way that the euro crisis has the potential of destroying, undermining the European Union,” he said.
“The euro is undermining the political cohesion of the European Union, and, if it continues like that, could even destroy the European Union,” said Soros in comments reported by the Wall Street Journal.
“With the profound social, economic and moral crisis that Europe is in, we can see a similar process of disintegration.”
“You can grow out of excessive debt , you cannot shrink out of excessive debt,” said Soros.