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Ken Griffin: Saving the European Union

Economists believe Germany should exit the EU and reintroduce the mark.

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A statue holding the symbol of the Euro stands in front of the European Parliament building in Brussels, Belgium. (Mark Renders/Getty Images)

Ken Griffin, the CEO of Citadel, has just published an op-ed in the New York Times with University of Chicago economics professor Anil Kashyap.

Griffin and Kashyap offer a simple plan to save the euro: Germany exit and reintroduces the mark.

In short, a German exit would devalue the euro, which would suddenly make the exports of the remaining countries much cheaper and more attractive to the rest of the world. This in turn would boost manufacturing and slash unemployment in the beleaguered.

The debt wouldn't disappear, but Griffin believes that a weak euro would give the most debt-laden countries more financial flexibility, giving them "needed breathing room to restructure their economies, reform labor markets, collect more taxes and reassure investors."

Here's the most powerful statement from the piece:

While most observers, including German policy makers, believe Germany will do what is necessary to save the euro, it is more important to save the European Union, which is older, larger and more significant than the euro zone. Continuing on the current trajectory will most likely entail more bailouts, more guarantees and ultimately dramatic sovereign defaults or enormous fiscal transfers. That would mean a continued loss of human capital and dignity for southern Europe and a nightmare of an open-ended commitment of trillions of euros on the part of Germany.

Griffin thinks that a German exit can be executed gradually with limited chaos.  The bottom line is that a German exit would be much better than any of the other alternatives.

Read the whole op-ed at www.NYTimes.com.

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Original Source URL: 
http://www.businessinsider.com/ken-griffin-german-exit-from-euro-2012-6

http://www.globalpost.com/dispatch/news/business/120627/business-insider-ken-griffin-european-union