Europe Is ‘Slowly Crumbling’: Expert

The euro is not a unifying force and the debt crisis has shown the differences between the euro zone nations rather than enhancing unity, Chris Tinker, founder at Libra Investment Services, told CNBC Tuesday.


“The permanent cost of debt is not uniform anymore. The euro is not a unifying force,” Tinker said on CNBC’s “Worldwide Exchange.” “We are having to manage in what is a slow crumbling of what the euro was about.”

He added that investors had become much more inward-looking since the debt crisis had taken hold and were now “country focused.”

“Investing in Europe en masse is changing and the political events at the weekend reinforced that. French investors are investing in French stocks, French bonds and French assets,” he said. “It’s not that they think the euro is going to break up. It’s more a realignment of assets and liabilities.”

The political chaos now being played out in Greece has reignited calls for the debt-laden country to leavethe euro zone bloc.

Elections in both France and Greece have seen the electorate rise up against the raft of austerity measures being rolled out across various countries in the euro zone.

In Greece, two thirds of the vote on Sunday went to parties that opposed the international bailout plan.

However, Tinker said the reality of the situation in Greece was far more complicated.

“It’s a binary decision. If Greece gets itself to the point where the European administration says, ‘We can’t play this game anymore,’ that starts a domino effect,” he said. “They are between a rock and a hard place.”

He warned that Greece would have to play by the rules to retain its place within the euro club as “throwing their toys out of the pram” was not an option for them.

Carsten Brzeski, senior economist at ING told CNBC the European Central Bank would be limited what it could do to prevent the situation in the euro zone from imploding, saying the picture was “very bleak” for the region.

“It is not the task of the ECB to solve the crisis. They cannot solve the crisis,” he said. “We have a fundamental, structural crisis that has to be solved by politicians and the mantra of structural adjustments. It is a no-go to renegotiate the fiscal compact but have a growth compact alongside it.”