The euro will not have a significant role in the global economy and the world's markets may themselves be heading for a depression, one of the world's best-known economists has said.
Prof John Kenneth Galbraith suggested the recent slump and recovery of US shares mirrored a similar dip just before the 1929 Wall Street Crash.
In an interview with The Irish Times, Prof Galbraith compared the pattern to that leading to the Great Depression: "In 1929, there was a substantial break in the stock market in the spring of that year - the so-called Warburg break. Then again in September there was an even more severe break in the market, also named for the person who predicted it, the Babson break. Maybe what we had in early August/September was a Babson break."
According to Prof Galbraith, the likelihood of the situation deteriorating again depends on the conduct of speculators.
"We shall have to see if the lesson of speculation has been learned," he said. "Some of the major insanities like Long Term Capital Management - the hedge fund - have been exposed."
"One must assume there is a new scepticism. But the possibility of people again seeing prices going up on the stock market, coming in, and by that action shoving them up further in the classic speculative bubble - that problem is still with us. It could happen again," he added.
The Boston-based economist, now 90 years old, served as President Franklin D Roosevelt's "Price Czar" during the second World War and served several other Democratic presidents.
Prof Galbraith does not expect the advent of a single European currency to have a significant impact on the global economy: "The European currency will be convenient, but I think its role is greatly exaggerated. "The European economies have grown closer together since World War Two," he added. "It is the prior institutional development which makes [EMU] possible. The currency is the period at the end of a sentence."
He also casts aside any fears about loss of national sovereignty after the euro begins: "I hope it is [lost] to some extent, because I am certainly not an advocate of sovereignty. In my lifetime we have paid an enormous price for sovereign pride."
Though retired from Harvard University, Prof Galbraith still writes every day - and continues to enjoy stirring the pot, for some.
"Nothing has given me more pleasure than the people who have been affected adversely by something I've written. I've never finished a page without saying `I hope someone dislikes that'."
