Nouriel Roubini Believes Austerity Will Doom Eurozone

(eToro Blog) In a recently released article published in Germany, renowned economist Nouriel Roubini weighed in on the Eurozone crisis once again. Roubini reiterated his position that the E.U. leadership should focus on growth and give up their long-held conviction that austerity and savings is the only way to go. That sentiment is very much in line with the anti-austerity drive that is sweeping through much of the Eurozone, though Germany’s policy makers continue to insist that budgets can be brought under control only through austerity.

As Roubini puts it, the “savings madness” should be stopped, and that Europe needs to grow through lowered taxes and increased wages. He believes, in fact, that Germany’s government should encourage Germans to travel to the Eurozone’s crisis countries to help boost growth there, and as an additional incentive should be given both a tax bonus and a sizeable travel voucher paid for by the German government.

Furthermore, he warns that a Greek ouster from the Eurozone could result in the collapse the Euro. He likens the help that should be offered to Greece to Germany’s cash injection of the then East German economies in the period following German unification. He believes that if Germany’s taxpayers understood that the costs for a Greek exit would be significantly more in the long term than ensuring their place in the Eurozone, then they would support further aid to Greece.

Like many analysts, including eToro’s Senior Analyst Lior Alkalay, Roubini believes that a massive injection of liquidity by the ECB is necessary to devalue the common currency and give the troubled E.U. economies an opportunity to become competitive.

Ahead of the Greek vote, traders are exercising extreme caution when trading the EUR/USD pair, in fear that the outcome will lead to a swift deterioration of the Euro. As of this writing, sentiment on OpenBook is slightly favoring buyers by 55% to 45%. OpenBook guru sadiqashanaz97, who has 5,707 followers and 759 copiers, profitably closed a long position with a 2.60% gain earlier, and is working toward improving what are already solid stats. For the last week, the guru posted a 7.4% profit, though for the last month a small loss of 1.6% was reported, but the quarter, six months and yearly profits are all solidly in the green at 8.9%, 33.8% and 200.3%, respectively.

OpenBook guru pawelskrzypek has had several short positions hit their TP over the past 24-hours, with solid gains of 8.75%, 10% and 14.50% and one short position opened earlier is already in the green. The guru, a favorite among OpenBook’s traders, has a 2.4% profit recorded for last week, 4.8% for last month, 11.6% for last quarter, 44.8% for the last six months and 145.7% for the year.

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