Hans-Werner Sinn on Eurozone Problems; France; Germany; Greece; Ukraine; Ifo-Präsident Hans-Werner Sinn

From The Telegraph

On Greece (from The Telegraph):

"Mr Sinn, who presents a bleak picture of the 18-nation bloc in his latest book, the Euro trap, suggests countries should adopt a “breathable euro”, where struggling nations could temporarily leave the single currency, write-off some of their debts, devalue, and then re-enter. "Greece would have done better had they exited the eurozone in 2010, but not permanently," he said. "The proposal is that the exit is only temporary and that the country stays legally part of the eurozone. It devalues its currency, carries out reforms and returns when it has recovered. I see this status of being outside the euro as a sort of hospital stage. "The realignment of relative prices that Greece and perhaps other countries need cannot really be achieved within the euro because it would either mean astronomical inflation in the core or deflation in Southern Europe of an order of magnitude which requires so much austerity that society may fall apart. "The whole point of structural reforms is that you become competitive. What makes you competitive? You have to have prices which for a given type of product are not higher than elsewhere. The southern countries all inflated incredibly under the credit bubble that the euro brought them. This extra inflation now has to be undone. “No dream of any politician can overcome this fundamental problem of having the wrong wages and prices,” he said".

Full interview transcript

Hans-Werner Sinn is President of the Ifo think tank

"The Ifo Institute is one of the leading economic research institutes in Europe and at the same time the one most often quoted in the German media".