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00:00The European Union is not a given the European Union is work in progress and indeed it is this integration in progress. And a Brexit would speed up this disintegration and this speeding up of this disintegration will create a gigantic deflationary force a vortex within continental Europe which will consume Britain . So you hear the Brits can vote to get out but they cannot leave the mess that will be left behind. Just ask you lastly about the state of the eurozone. You write that the euro zone's architecture was unable to withstand the earthquake that we saw in 2008. We moved from bailout to bailout to bailout discussions of how to fix things in a very short term perspective. Here we are in 2016. Has there been enough focus on reinforcing that architecture so that if there is another shock like we saw in 2008 the eurozone could withstand it. No we in a name. We've done all the right things. We created the European Stability Mechanism we created a banking union that sounds perfect except that if you look behind the acronyms and behind the facade what you discovered is that the European Stability Mechanism is destabilizing the banking union exist on a name not in practice. So for instance if you had 10 million dollars a year you would really care about whether there in a Portuguese bank or in a German bank. That's not a banking union. When the probability of being bailed in depends on which jurisdiction you are you're not talking about a common currency anymore you're not talking about the common banking union. The European Stability Mechanism mechanism is being financed by CDO like eurobonds where the every single one of them is compartmentalized with different chunks being backed by different states with different interest rates and different default probabilities and a vicious correlation between the default probabilities just like a Lehman Brothers CEO. So we every single time we responded to sub crises within Europe by creating new institutions seeing new frameworks the DNA of the problem was embedded within the solutions that we found. So this this is what I'm trying to explain in the book that is there's been a comedy of errors in the last six seven years .

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Varoufakis: Brexit Would Speed Up EU Disintegration

Former Greek Finance Minister Yanis Varoufakis talks with David Gura about what he sees as potential Brexit fallout for the European Union and EU's ability to withstand another shock similar to the financial crisis of 2008. (Source: Bloomberg)

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