Former IMF director Kenneth Rogoff, Harvard’s Thomas D. Cabot Professor of Public Policy, told CNBC Friday that the European Central Bank’s bailout package is just a $1 trillion fig leaf covering the problem.
“It’s a fig leaf for the ECB to go in and buy junk across the markets in Europe and bailout countries,” Rogoff said. “The Germans know that they’re going to end up paying more than the other countries.” [starts around the 7:45 minute mark in the clip]
According to Rogoff, a better move would have been to arrange for Greece and Portugal to leave the European Union.
“It was nuts to let Greece and Portugal in as quickly as they did,” Rogoff said. “They just looked the other way and decided to let them in. Greece had high inflation, default risks. Portugal had an IMF program early as 1984.”
