The Eurozone Crisis: Three Things to Know

Former secretary of the U.S. Treasury and CFR Co-Chair Robert E. Rubin identifies three reasons why the eurozone crisis has "reached a point of serious consequence":

• EU Leadership Stalemate: Leaders of the European Union have been "behind the curve" from the start, Rubin says. Because the politics are difficult, political leaders are unable "to adopt the kind of substantive solutions that would give them interim stability."
• Contagion: "The issues in Greece are having increasing contagion effect in Spain and even in some extent in Italy," Rubin says. "The ECB, although it can buy some time, is not an answer," he says, emphasizing the limits to the European Central Bank’s willingness to extend additional liquidity as well as limits to its ability to do so effectively without causing investors to lose confidence, causing a market crisis.
• A Triple Crisis: "The eurozone is experiencing three crises at the same time--a fiscal crisis, a banking crisis, and growth crisis," Rubin says.

"If the eurozone continues to unravel," Rubin cautions, "not only will that have very serious consequences for the eurozone, but I believe it will have serious and maybe even severe consequences for the entire global economy, including the United States."