Swiss central banker a euro crisis Nostradamus?

Reuters
February 7, 2012

Nearly two decades ago, the man now likely to become the head of Switzerland's central bank foresaw the neighboring euro zone's troubles in a doctoral thesis, saying the likes of Ireland, Italy and Greece would not be able to control their debt.

Vice Chairman Thomas Jordan, who has served on the Swiss National Bank's governing board since 2007 and is currently interim chairman, also said a currency union gave some states the incentive to load up on debt and could lead to a banking crisis.

Jordan was thrust into the limelight last month when SNB chairman Phillip Hildebrand stepped down amid an uproar over a currency trade made by his wife.

In his dissertation for the University of Berne, published in 1994, roughly eight years before Europeans handled their first euro notes and coins, Jordan prophetically warned of strained public finances in exactly those countries that have actually needed a bailout or where debt levels seem particularly precarious.

"Achieving the 60 percent debt limit is hardly possible for Belgium, Ireland, Italy and Greece," he wrote. "Italy and Greece need to undertake major steps even to stabilize their debts."

More