British Think Tank Sees Euro Likely Collapsing Over Next 10 Years (FXE)
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The Center for Economics and Business Research said Friday that the euro has a one-in-five chance of surviving as it currently exists over the next 10 years due to competitive imbalances between the countries using the currency.
The British think Tank said that Spain an Italy would have to refinance more than 400 billion euros ($530 billion) of bonds this Spring. This move has the potential to spark a new fresh crisis in the eurozone.
"The euro might break up at this point, though European politicians are normally able to respond to a crisis," said CEBR Chief Executive Douglas McWilliams.
The debt crisis gripping countries like Greece and Ireland in 2010 could force Germany to grow tired of bailing out its European counterparts, despite Chancellor Angela Merkel'c constant assertion that the country is committed to the euro.
"The euro is the foundation of our prosperity," Merkel said. "Germany needs Europe and our common currency. For our own well-being and in order to overcome great worldwide challenges. We Germans assume our responsibility, even when it is sometimes very hard."
McWilliams added that the euro's downfall come from the failure of the weaker economies in the area to be competitive over the long term.
"We give it only a one in five chance of surviving in its present form for 10 years. If the euro doesn't break up, this could be the year when it weakens substantially toward parity with the dollar," McWilliams added.
Despite the bleak view of the research firm, the CurrencyShares Euro Trust (NYSE: FXE) ETF is up 66 cents to $133.01 in premarket trade Friday.
The British think Tank said that Spain an Italy would have to refinance more than 400 billion euros ($530 billion) of bonds this Spring. This move has the potential to spark a new fresh crisis in the eurozone.
"The euro might break up at this point, though European politicians are normally able to respond to a crisis," said CEBR Chief Executive Douglas McWilliams.
The debt crisis gripping countries like Greece and Ireland in 2010 could force Germany to grow tired of bailing out its European counterparts, despite Chancellor Angela Merkel'c constant assertion that the country is committed to the euro.
"The euro is the foundation of our prosperity," Merkel said. "Germany needs Europe and our common currency. For our own well-being and in order to overcome great worldwide challenges. We Germans assume our responsibility, even when it is sometimes very hard."
McWilliams added that the euro's downfall come from the failure of the weaker economies in the area to be competitive over the long term.
"We give it only a one in five chance of surviving in its present form for 10 years. If the euro doesn't break up, this could be the year when it weakens substantially toward parity with the dollar," McWilliams added.
Despite the bleak view of the research firm, the CurrencyShares Euro Trust (NYSE: FXE) ETF is up 66 cents to $133.01 in premarket trade Friday.
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