Nobel winner: Germany's the problem, not Greece

cnbc ^ | 1-26-2015

[Citizen Zed]

Nobel Prize-winning economist Joseph Stiglitz told CNBC on Monday that the euro zone should stay together but if it breaks apart, it would be better for Germany to leave than for Greece.

"While it was an experiment to bring them together, nothing has divided Europe as much as the euro," Stiglitz said in a " Squawk Box " interview.

The risk of a sovereign default in Greece has increased after the anti-austerity party Syriza won Sunday's snap elections, raising concerns over the possibility of a Greek exit from the euro zone.

Greece is not the only economy struggling under the euro, and that's why a new approach is needed, Stiglitz said. "The policies that Europe has foisted on Greece just have not worked and that's true of Spain and other countries."

The Columbia University professor is one of 18 prominent economists who co-authored a letter saying that Europe would benefit from giving Greece a fresh start through debt reduction and a further conditional extension in the grace period. But in the letter in the Financial Times last week, they stressed that Greece would also have to carry out reforms.

"Greece made a few mistakes ... but Europe made even bigger mistakes," Stiglitz told CNBC. "The medicine they gave was poisonous. It led the debt to grow up and the economy to go down."

"If Greece leaves, I think Greece will actually do better. ... There will be a period of adjustment.

[gr8eman]

What comes around goes around. The majority of Germans are drink the Kool Aid socialists. When their government sent their retirement money to Greece, I explained to them that the second the money was transferred, it was gone..."POOF!"...and they would never get it back. They just called me the crazy American and said they should help people in need.

We'll see how that works out!