Paul Rodriguez, Director of ThinkTrading.com left his gloves at home today and came out swinging for the Eurozone today.
Looking back to the prevailing trends at the start of the Eurozone, Rodriguez comments that the Greeks aren’t completely innocent, but given the opportunity to borrow at German rates for so long was a recipe for disaster that is coming back to haunt the currency union.
The euro masks economic reality
The first of many astute quotes from Rodriguez was “You can’t sell tomatoes and buy BMW’s” highlighting the disparity in economic realities within Europe that has been masked by the single currency. He believes that you have to look at the Greek economy and ask honestly whether the euro or the drachma reflects the reality of what is happening there.
The euro is structurally flawed and can’t continue this way
Rodriguez added that you can’t ask all football teams to wear the same kit as nobody will be able to tell teams apart, and this is what has happened with the euro. He believes that currencies are supposed to reflect the reality on the ground and the euro should never have been created in this way. He added, “The whole union can’t prosper on equal basis, it is impossible.”
When people hit the streets, things get ugly
He sees things taking a turn for the worse, adding that austerity leads to unhappy people, and the worst case is that people come onto the streets and start to take control of the situation themselves. The Greeks voted for a solution out of austerity, and the reality is quite the opposite. In the short-term Rodriguez thinks that it looks like a Greece deal has been made, but in the long-run things might change quickly. On paper everything might be ok, but uncertainty still exists for the long-term scenario.