Marshall Auerback on Eurozone Exit Strategies

Marshall Auerback, portfolio strategist at Madison Street Partners and senior fellow at the Roosevelt Institute, discusses Eurozone exit strategies with Benzinga Radio's Matthew Boesler. Commentary on the Eurozone debt crisis has revolved around the possibility of Greece returning to a native currency as a result of its insolvency, but Auerback presents an alternative approach: “If we do want to preserve the Euro, but we not prepared to go all the way towards [political and economic union], maybe we're looking at this the wrong way around. Instead of having the weaklings go out one by one, maybe the optimal way to minimize economic disruption is to have the strongest country go out. Germany has the financial wherewithal to withstand the likely shock that would emanate from their withdrawal from the Eurozone. Presumably, their newly-reconstituted Deutsche Mark would increase in value so they would be able to repay any outstanding Euro debts. At the same time, what's left of the Eurozone would get a significant boost to their competitiveness by a devaluation against [Germany's new currency].” Amid fears that Greece's return to the Drachma would begin a death by a thousand cuts for the Euro, a German withdrawal may become an attractive alternative if the debt crisis worsens. Download the full podcast for further analysis of the Greek debt crisis and Auerback's contagion analysis for other Eurozone countries.