Simon Johnson Worries About Depression Versus Inflation In Europe

Simon Johnson, a former Chief Economist at the IMF, offers his views on the euro zone crisis. He believes that a collapse in Europe would go well beyond Europe since sovereign debt in Europe is widely held by international investors. Even Germany would have to pay higher interest rates. The ECB could print enough money to rescue Italy but this leads to moral hazard like we had in the last financial crisis precipitated by Wall Street. It could also lead to inflation which nobody likes, especially Germany.