pandora's box
“Pandora’s Box,” by Paul C├ęsaire Gariot. Wikimedia Common


Greece’s ongoing and deteriorating banking crisis has made an exit from the eurozone, or a “Grexit,” an increasingly attractive option for the financially beleaguered country.

During a webcast for investors on Tuesday, DoubleLine Funds’ Jeffrey Gundlach argued that a grexit would be bullish for the value of the euro in the near-term.

But a grexit event would “open up Pandora’s box,” he said.

“When one leaves, others join,” he said. “There never one cockroach.”

This precedent would effectively create a model for other debt-laden countries, like Spain or Portugal, to leave as well.

Gundlach reflected on U.S. just before the Civil War. Specifically, he pointed to South Carolina’s decision to secede from the union in 1860. That was later followed by the secessions of Mississippi, Florida, Alabama, Georgia, Louisiana, Texas, Virginia, Arkansas, North Carolina, and Tennessee. They made up the Confederate States of America.

Citing the work of economist Martin Feldstein, Gundlach argued that a monetary union without a political union can’t work.

“It’s kind of the beginning of the end,” Gundlach said of aGgrexit.

But for now, Gundlach likened the euro to being more like Rasputin in that “It doesn’t want to die.”

As reported by Business Insider