European Debt Crisis

How concerned should we be over Greece?

Jeremy Hobson May 10, 2012

Jeremy Hobson: Europe is where we’ll start now with Gus Faucher, senior economist with PNC Financial. He’s with us live from Pittsburgh. Good morning.

Gus Faucher: Good morning.

Hobson: Well Gus, let’s start with Spain, where the government there just took over one of the country’s largest banks. Do you think there is the potential for a full-scale banking crisis in Europe?

Faucher: There is the potential for a full-scale crisis, but I think the steps that Spain is taking are reducing the odds of that and that’s good news both for the eurozone economy and for the U.S.

Hobson: OK. So perhaps not a banking crisis at the moment, that’s good. What about Greece, Gus? There were elections over the week, they still have not formed a government, a new government. They might have to go back and have a new round of elections. There’s a lot of talk about Greece maybe leaving the euro, what do you think?

Faucher: Well I think the Greece voters are fed up with austerity, but it’s not clear whether or not they want to leave the eurozone. I’m hopeful that the situation in Greece will settle out so that the nation decides to stay in the eurozone because if it leaves that could open the door for great chaos there.

Hobson: You think it’s going to be up to the Greeks whether they stay?

Faucher: I think so, yes. They need to make a political decision and they need to make an economic decision as to whether the eurozone is the correct choice for them, and I think it is.

Hobson: So on a scale of 1-10, how concerned are you about Europe having a big impact on our economy right now?

Faucher: I’m at about a five right now. I think things have settled somewhat. There is some confusion over Greece. But I think in the past I’ve been at an eight or a nine, so I think things are looking a little bit more stable there now.

Hobson: Five seems pretty good compared to that. Gus Faucher, senior economist with PNC Financial, thanks a lot.

Faucher: Thank you.

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