Lloyd's plans for euro collapse
The insurance market Lloyd's of London is preparing contingency plans for the possibility of the euro collapsing, its chief executive has said.
With Greece facing new elections in June and anti-bailout feelings high, there are fears Athens may be forced to exit the eurozone.
In a Sunday Telegraph interview, Richard Ward said Lloyd's needs to "prepare for that eventuality".
He said that Lloyd's would settle claims using multiple currencies.
Mr Ward is one of the first bosses of a large UK business to admit he is planning for the end of the euro.
http://www.bbc.co.uk/news/business-18226128
Why should the Euro collapse if Greece leaves?
I have a Economist sub and wondering about the UK media focus on foreign economies while Mr Camerons strategy of devalueing the Pounds completely fails.
The recession is longer than in 1930s and everything we see is a common tactic to blame the Euro, while the UK exports to non-EU countries decline.
Completely wrong focus ATM if you ask me.
People need to stop comparing what is going on right now with the crash and depression of the 1930s. They are two different circumstances. What we have now is a sovereign debt and spending problem. The bulk of industrialized countries have set up a social safety net and spending structure that is slowly killing the very people it was intended to benefit. You now have three worlds, emerging nations, corporations, and large industrial nations. Each of them operate with different circumstances and have both benefits and liabilities. The current financial structure of the large industrial nations is what will cause the global economy to falter. On on side you have pensions, benefits and other entitlement programs, on the other side you have consumers and taxpayers. If you take away from either side, the economy will suffer....and you will create the haves and have nots.
I am not comparing the type but the period of a recession.Originally Posted by HK in AK
Also: There are some nations where the safety nets fail.
Typically the nations with less reforms in the last decades.
The sensationalist press and irresponsible talking contribute more to the crisis than all things money.
The Euro Currency should never have been created period .. it was flawed right from the start by those shower of deluded dimwits that thought they knew better ,
Well they didn't ..Instead we the tax payer has been left with the bill also citizens throughout the EU aren't a fukin piggy bank to be plundered by Goverments to fix other Countries Over spending ..
You're talking out of your arse again.
Yes, better close that Chunnel already, masses of money hungry €urospeans will be swarming the isles soon.
Retarded and untrue title to the rest of the article but what do i expect from journalists ....
Just hedging their bets. That is what big insurance companies do. And sending a message that they are prepared.
It's a difficult question to answer shortly, but I'll give it a shot.
The issue at hand is as follows: northern EU countries have had, due to several reasons, a foreign trade surplus in the intra-EU trade, while southern EU countries have had a foreign trade deficit. A trade deficit will always lead to increased debt either on the public or the private sector, unless the nation is financially sovereign, which none of the EU countries are (Technically non-euro countries could be, but they have chosen to adhere to Maastricht treaty regarding their central banks). In essence, if currency cannot be devaluated, debt is collected. Private debt will lead to a recession in a few years timeframe as the private sector cannot print money and cannot sustain the growing debt. Public sector could sustain increased debt (as in the cases of USA, Canada and Japan for example), if the central banks are allowed to purchase government bonds (which the ECB is not allowed to do). This rule means that eurozone governments must find their capital from the markets which in this current case means unsustainable interest rates for the countries concerned.
Greece leaving eurozone does not collapse the currency per se. It would above all help the Greeks, especially if they "nationalize" their debts and pay them back in Greek currency, that would rapidly devalue. This would result in serious issues in the banking sector, namely banks would require public funding to stay afloat.
It could also lead to a domino theory, prompting Italy, Spain, Portugal, Ireland and possibly even France to leave the eurozone. In this case some of the trade advantages of northern EU countries would effectively disappear, resulting possibly in trade deficits in the north and surpluses in the south. Thus it is within the north's, especially Germany's interest to keep the eurozone intact, even if by subsidizing them. I can imagine how hard it is for Frau Angela to explain this to Jürgen the taxpayer who would like to buy a new Volkswagen instead of giving his money to the Siesta - Manana people.
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