Greece should leave the Euro

another hit from 1987 as we remember the market crash onthis day 24 hours ago. there's a look at some of the protests in greece today. massive strike is under way. protesters rallying against another round of austerity cuts ahead of a key vote set for tomorrow. michael spence is a nobel lar laureate in economics. he joins us here on the set. good to see you again, michael. good to see you, carl. obviously the pictures keepbringing us back to greece. you make the point, though, that in effect it is already dead. i think so. greece probably can be bailed out in terms of affordability on the fiscal debt. but they're 40% out of bounds in terms of being able to kind of grow the economy. they have huge trade deficit with the rest of europe.it's -- and they don't have the exchange rate. so it's very hard to see how you can keep greece in the euro zone and have them have a future. you said they should exit? you know, it's a rock and a hard place, carl. they exit and the fear is you have a lehman-like event in the euro zone. and they don't exit and you've got an economy that's dead in the water. i think probably at some point they'll figure that out and decide there's a better future if we can reset the terms of trade. do you see a path not to where europe's problems are solved, but to where it becomes what we would call in the biz news business a second-page story? yes, i do. what's being talked about nowmay not be quite enough. but they're pretty determined to solve this problem. and the main events are -- the big countries, spain and italy, getting things under control. and the ecb backed by the euro zone countries just stopping the contagion. they have to do it enthusiastically so that the speculators just can't drive the yields up. does the imf need to -- obviously the huge disagreement around the globe about whether or not they should go in with their own bazooka. but some say, if you leave it up to the europeans, they have shown time and again they'reunwilling to fill that vacuum with political will, with money and maybe you really do need the imf? the imf has the technicalcompetence to play a really important role. i think and hope that the europeans will ask them to play that role in implementingwhatever solutions they come to, the austerity programs, thereform and growth f-oriented programs, all that stuff, the imf, that's what they're good at. and they've done it before. not on this scale and not in advanced countries, but they're good at it.any sense about how much the german economy has benefited? the huge german how much have they benefitedfrom everything that's been involved with the euro over the last decade? well, they've benefited for sure. on a standalone basis as the way the euro trades now, it's an undervalued currency from a german point of view. and that helps exports. but on the other hand, you have to remember, germany went through a very tough reform program in the period -- the decade before the crisis and restored their productivity and competitiveness. so the combination of those two things puts them in pretty goodshape.


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