Martin Feldstein: euro decline was irrational.

Martin Feldstein: euro decline was irrational.

Martin Feldstein, professor at Harvard University and the former president of the National Bureau of Economic Research, claimed that fears of Greek debt crisis were exaggerated. He called the investors’ behavior “irrational”. This was the main reason why euro lost 4.6% against dollar this year in spite of better European trade balance.

“There’s, in my judgment, no real reason why the euro should have sold off, overall. After all, Germany is not at risk. France is not at risk”, said Feldstein.

According to him, the markets should worry more on dollar that on euro. The Congressional Budget Office forecasts that Obama’s spending policy will result in $1.5 trillion budget deficit this year and a $1.3 trillion deficit in 2011. In addition, United States would need to return its funds from the rest of the world. He thinks that confidence, investment and household consumption may be negatively pressed by the concerns of the tax rise possibility in U.S.in order to fight the debt.

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