Courtesy of Mish.
Anders Borg, Sweden’s finance minister, has warned it is ‘probable’ that Greece will leave the common currency.
As European Union leaders prepare for a summit next week devoted to saving the euro, Swedish Finance Minister Anders Borg said Greece may quit the common currency within the next six months.
“It’s most probable that they will leave,” Borg said today on a conference call from Tokyo, where global finance officials have gathered for the annual meetings of the International Monetary Fund. “We shouldn’t rule out this happening in the next half-year.”
Given Greece’s lack of competitive industry and inability to implement necessary reforms, “it’s a little bit hard to see how they’ll resolve this situation without stimulating competitiveness through a significantly lower exchange rate,” Borg said.
Borg has long been pessimistic about Greece’s future. In July, he said “some sort of default” was the most likely scenario for Greece. Last month, he said he couldn’t rule out a Greek euro exit within a year and that European banks were prepared for such an outcome.
Comments From Saxo Bank
Steen Jakobsen, chief economist for Saxo Bank in Denmark pinged me with with an email about Borg this morning …
If Anders Borg is saying this – people needs to listen – he is by far the most pragmatic FM in the world, and very unemotional. This is major sign of the upcoming trouble for Greece and reconciling a deal where Germany and Austerity North gets something, and Club Med lead by Monti and Hollande continues to be non-accountable.
I think this phase is the most difficult now it’s real: real money needs being committed, real election as in German election, and real money – against this stands the IMF – the non-expert with their medicine now proven to kill patience rather than cure them – as per my Friday email: Is IMF short for I must Fail
Mike “Mish” Shedlock