Greece should begin an "orderly" default and voluntarily leave the euro in order to escape a "vicious cycle of insolvency, low competitiveness and ever-deepening depression," economist Nouriel Roubini said in a guest column published Monday in the Financial Times. Other options, such as a sharp weakening of the euro, a rapid reduction in Greece's unit labor costs or a rapid deflation in prices and wages appear unlikely or impractical, said Roubini, a New York University professor and chairman of Roubini Global Economics. While the process would be traumatic, a return to the drachma and a sharp depreciation in its value "would quickly restore competitiveness and growth, as it did in Argentina and many other emerging markets which abandoned their currency pegs," he said.
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