Nobel-winning Columbia professor Robert Mundell, considered the "father of the euro" provides some biased views on his creation, and how it is impacted by Greece (spoiler alert: this will only make the EMU stronger). To be sure, he sees no risks of Greece spillover into the broader eurozone, and in fact is calling for the adoption of the euro by Britain. Probably not worth holding your breath on that one. What he does highlights is that Greece is not the powderkeg - Italy is. This is inline with Bank of America and others' warning that the biggest concern in the eurozone crisis is indeed the Boot.
"I think it would be very difficult to bail Italy out. I think we have to make sure that whatever is being done to Greece, and possibly to Portugal and maybe Ireland has to also save Italy. Italy has got to be worried...Right now I think they should let the euro ever, for the next 10 years, rise above $1.40."
We are confidence Bernanke and Shirakawa will miss that particular memo.
Here are the policy recommendations from Mundell on Greece:
- Europe must set discipline
- Greece should "act like adults"
- Long-term loan should be provided to Greece with strings attached
So in Greece all is contained, ignore the strikes and the bombings. Go back to buying stocks.
Soundbited Bloomberg Television interview below: