Mon, Jun 18 2012, 19:22 | FXstreet.com
FXstreet.com (Córdoba) – Wells Fargo’s John E. Silvia, Chief Economist and Jay H. Bryson, Global Economist, give their views on the post-Greece elections Europe and offer a possible solution to the problems in the Eurozone: “In our view, a long-term fix, which would be the best possible outcome, would start with more fiscal transfers to a centralized authority say, in Brussels. These transfers would facilitate economic and financial support of countries that are in distress, either now or in the future, by countries with the ability to lend support.”
“Joint liability for, at least a part, of individual country debt is probably necessary as well (i.e., issuance of so-called “Eurobonds”). However, nations with the ability to provide fiscal transfer (e.g., Germany, Finland and the Netherlands) undoubtedly would balk at the prospect of unlimited and unconditional support to their less thrifty neighbors. In return for fiscal support, these nations would demand some veto over the budgetary processes in the recipient countries.” They add. “In other words, budgetary authority would need to be centralized,” the economists conclude.