By Steve Tawa
PHILADELPHIA (CBS) — As the Greek debt crisis escalates, creating drama in world markets, a Wharton School professor sizes up whether Greece might exit the Eurozone and what it means to us in the United States.
Professor Mauro Guillén, director of the Lauder Institute at the University of Pennsylvania’s Wharton School and an expert on multinational economics, says the current crisis is the result of many years of what he calls “mismanagement” by government leaders in Greece.
“Essentially, the Greek economy has been in recession, unemployment is extremely high, and the Greek government, under terms proposed by Europe, cannot possibly repay its debt,” he explains.
While some analysts say the latest chain of events could eventually lead Greece to exit the Eurozone, Guillén doesn’t think it will come to that.
“I think this is a negotiating tactic, to see if Europe blinks and agrees to a debt restructuring — that is to say, a reduction in the amount of money that Greece will eventually need to pay back,” he tells KYW Newsradio.
But if the Greek government gets more concessions to keep it from defecting from the Eurozone, Guillén says, other countries, such as Portugal and Spain, may try to do likewise.
Nineteen nations in the Eurozone have a common currency, the euro. The euro was falling sharply again today against the US dollar, and Guillén sees a bright note in that.
“On the other hand, American tourists going to Europe this summer will actually enjoy lower prices, in dollar terms,” he says.
In the end, Guillén expects Europe to “muddle through the crisis,” with short-term fixes to the Greek economic crisis.