The President of the American investment firm Goldman, Sachs, blamed by some critics for helping cause Greece’s crushing economic crisis with its financial instruments,said that Europe still faces “fundamental problems” and that policy makers don’t appear to have a plan for generating economic growth in the region’s southern nations, such as Greece.
“No one has solved the European economic issue for me yet,” Gary Cohn, 52, said in an interview with Bloomberg Television in Hong Kong. “No one’s given me an explanation of how we’re really going to create growth in Greece, or in Spain, or in other peripheral countries.”
The region’s economy is set to contract 0.1 percent this year before returning to growth in 2014, according to a Bloomberg surveys of analysts. European Central Bank (ECB) President Mario Draghi’s measures, including injecting funds into banks and offering the lenders unlimited cash, aren’t enough to bolster growth, Cohn said. “That is a good short-term solution to the problem,” he said. “It doesn’t create economic growth. It creates financial stability in the banking system, but as I said, no economic growth.”
The 17-nation currency’s strength poses a big obstacle to the southern countries in the region, Cohn said. The euro is the best performer in a basket of 10 major currencies this year after the Swedish krona. The euro has appreciated since Draghi took office on Nov. 1, 2011. He infused 1 trillion euros ($1.35 trillion) into banks, cut interest rates and offered to buy government bonds.
“You’ve got countries in the north where the currency’s too cheap, you’ve got countries in the south where the currency’s way too expensive,” he said. “The countries in the south have the need for economic growth. How they create that economic growth with a currency that’s too strong? Very, very difficult.”