« Why Poor Countries Are Poor | Main | George Mason Wins »

Some in Europe have a dream of expanding the euro to 12 more countries. But Desmond Lachman says that it's not working where it's already in use.

The daunting challenges to the euro experiment are perhaps best exemplified by the response I got from a former Salomon Brothers' emerging-market trader when I asked him where the next emerging market debt crisis would occur. Without missing a beat, he replied that it would take place in Greece, Italy or Portugal. All three of these countries suffer from government deficit levels and public debt ratios that would make any emerging market debt trader feel distinctly at home. These traders would also get the distinct feeling that they had already been to this movie before about a country unsuccessfully struggling with the rigors of a fixed exchange rate system.

Posted by edelfenbein at March 26, 2006 9:01 AM