Fiscally embattled Greece will default on its loans, causing a devastating economic domino effect throughout the European Union, a pair of financial experts predicted this week.
About 500 people gathered at the Surrey Regional Economic Summit Thursday to hear various perspectives on the global economy.
Pam Woodall, senior editor and former Asia economics editor for The Economist, went head to head with John Fund, a columnist for the Wall Street Journal. On many things they differed, but they both agreed Greece will default on its loans, causing a ripple throughout Europe and to a lesser extent, the rest of the world.
Fund said the introduction of the Euro, a currency now used by 17 of the 27 countries in the European Union, was an economic endeavour that unfortunately became political.
Not everyone should have been invited to use the currency, Fund said, and Greece should have been among those left off the invitation list.
He noted that if Germany had gone to referendum on whether the population wanted to give up the deutchmark for the euro, it would have been a resounding “no.”
Woodall agreed with Fund that Greece will inevitably default on its loan. The trick, she said, will be “agreeing who shall pay for what.”
The trouble with becoming part of the European Union is that there’s no escape clause, Woodall said.
“The European Union is like a roach motel. You can check in, but you can’t check out.”
Woodall said of greater interest to her is what’s going on in China.
“I’m sure China will become the world’s biggest economy,” Woodall said. “It will take over the U.S. (in economic health) in two to three years. This is the story of our time.”
Fund said the problem with China is you can’t believe everything the country is reporting.
Some of China’s figures, he said, are hidden behind “authoritarian controls.”
Woodall is concerned about U.S. policy that slap tarriffs on products coming from China.
“America will lose more than China if it slaps on tarriffs,” Woodall warned.
She quoted former president Ronald Reagan who said the nine most frightening words in America are, “I’m from the government and I’m here to help.”
She wishes people would stop focusing on whether there will be a recession and determine what the growth rate will be over the next several years.
“The long-term debt forecasts look awful,” she said.