PARIS (MNI) – France could one day become a victim of the Eurozone
sovereign debt crisis, American economist Nouriel Roubini warned in an
interview published Monday.
While France continues to borrow at low rates thanks to its prime
credit rating, public deficits of close to 8% “could worry investors one
day,” the former U.S. Treasury advisor under President Bill Clinton told
the French daily Le Monde.
One of the few economists to have predicted early on the collapse
of the U.S. real estate bubble and the resulting recession, Roubini
argued that French President Nicolas Sarkozy had not implemented
promised structural reforms.
“The anger in the street seen during the pension reform could
discourage any action until 2012 and the next presidential election,” he
said. “But one must not wait too long. One day the markets wake up and
it’s too late. No country can be complacent in the face of its
deficits.”
Roubini reiterated his view that debt restructuring could be the
least-bad solution for high-debt countries under attack from the
markets. Pushing back repayment deadlines could be a “market-friendly”
solution, he suggested.
“There is no need to wait until 2013,” he said. “It could be done
tomorrow. Greece’s debt is more than 100% of GDP. And in two years it
will no doubt still be too high to be sustainable.”
Comparing the situations in Ireland and Iceland, the economist
noted that the non-EMU member was able to devalue its currency and erase
part of its debts. “Two years after the crisis, growth is taking off
again. Ireland is in the process of resolving its solvency problem, but
growth will not rebound so fast.”
“Saying that, I’m not suggesting anything,” he said. “But…”
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