Jim O'Neill, chairman of Goldman Sachs Asset Management, warned that the Irish rescue package did not solve the problems at the heart of the single currency."Unless there's an underlying solution to not just the debt challenge, but also to … how European monetary union sits together involving all these domestic political partners, how can we forget about the problems lurking with Portugal and Spain," O'Neill said in a TV interview.
Other market experts were also concerned about the eurozone. Graham Turner of GFC Economics said the solution for weak members might be for Germany to walk away from the single currency.
He suggested that Austria, Finland, the Netherlands and Germany could form a new deutschemark bloc which would allow the other 12 members of the eurozone to devalue and reflate their way out of the crisis. "It has to be a better option than the present straitjacket of a single currency," said Turner.
Stock markets tumbled as anxiety about contagion from Ireland was exacerbated by news, just as European trading began, that North Korea had shelled the South Korean island of Yeonpyeong, near their disputed western border.Wall Street Journal,The Washington Times,Athens News,The New York Times,USA Today
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