The Dominoes Of Doom

Banks Build Contingency for Breakup of the Euro

The main danger of a euro breakup, said Stephen Jen, managing partner at SLJ Macro Partners in London, is “redenomination risk,” the unpredictable effect that a euro breakup would have on financial assets as newly created currencies sought their own levels in the market and the value of contracts drawn up in euros came into question.

Most people hope that will not happen. “Remember when Lehman went bankrupt — nobody could anticipate what happened next,” said the French banker who was not authorized to speak publicly. “That was a company, not a country. If a country leaves the euro — multiply the Lehman effect by 10,” he said.

Boldfaced emphasis added by me.

Prepare for riots in euro collapse, Foreign Office warns

Diplomats have also been told to prepare to help tens of thousands of British citizens in eurozone countries with the consequences of a financial collapse that would leave them unable to access bank accounts or even withdraw cash.

Boldfaced emphasis added by me.

And:

If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse.

Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit.

The Financial Services Authority this week issued a public warning to British banks to bolster their contingency plans for the break-up of the single currency.

Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.

Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.

Boldfaced emphasis added by me.

A collapse of the Euro and fracturing of the eurozone would not be the end of things.

It will just be the end of Act One.

Whatever consequences occur in Europe, multiply them by the several hundred million guns owned here by Americans.

It will only be even worse over here when the time comes.

Re-calibration.

Re-normalization.

Re-denomination.

Re-leveling.

Pick any term you want. It’ll be used here in America the day the ATMs stop working.

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1 Comment

Filed under Collapse

One response to “The Dominoes Of Doom

  1. Pingback: The Dominoes Of Doom | Gold and What Moves it. | Scoop.it

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