Expect major changes to Euro
Desmond Lachman of Washington's American Enterprise Institute, a former investment banker & IMF official, foresees a european banking crisis next year & thinks the Euro is in the process of unraveling. America should “get ready for the European economic tsunami” that could derail the US recovery.
German & French banks hold the bulk of the $2 trillion of sovereign debt owed by Portugal, Ireland, Greece & Spain.
Eurozone's structural flaw is : unlike the US, it has a single monetary policy but no common fiscal policy. This means disparate spending and tax policies among each member government.
Edwin Truman of Peterson Institute for International Economics says eurozone faces “a collective run on the financial institutions & governments”.
Significantly, the German finance minister & the head of the ECB have broached the issue of member states ceding some fiscal authority to a eurozone entity.
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