FT - Businesses plan for possible end of euro

Mr_Mumble

International companies are preparing contingency plans for a possible break-up of the eurozone, according to interviews with dozens of multinational executives.


Concerned that Europe’s political leaders are failing to control the spreading sovereign debt crisis, business executives say they feel compelled to protect their companies against a crash that can no longer be wished away. When German chancellor Angela Merkel and French president Nicolas Sarkozy raised the prospect of a Greek exit from the eurozone earlier this month, it marked the first time that senior European officials had dared to question the permanence of their 13-year-old experiment with monetary union.


“We’ve started thinking what [a break-up] might look like,” Andrew Morgan, president of Diageo Europe, said on Tuesday. “If you get some much bigger kind of ... change around the euro, then we are into a different situation altogether. With countries coming out of the euro, you’ve got massive devaluation that makes imported brands very, very expensive.”


Executives’ concerns are emerging as eurozone finance ministers weigh ever more radical options to tackle the sovereign debt crisis, including the possibility of funnelling European Central Bank loans to struggling countries via the International Monetary Fund.
Car manufacturers, energy groups, consumer goods firms and other multinationals are taking care to minimise risks by placing cash reserves in safe investments and controlling non-essential expenditure. Siemens, the engineering group, has even established its own bank in order to deposit funds with the European Central Bank.

The rest (probably paywalled link). Five writers credited with the story so the "dozens" of executives being interviewed is unlikely to be an exaggeration.

julieq

Any big company will be engaged in a range of contingency planning projects, so this is hardly big news. It doesn't mean that anyone thinks this is inevitable or even likely, it just means that given that it's a high impact risk it needs a contigency plan. The article is written to give the impression that business is expecting a breakup, which really isn't the case. If there is one, Siemens and other companies will have a plan in place to minimise impact, that's all. The same as they will have a plan for a swine flu pandemic or the destruction of a data centre in a fire.

I don't know if anyone else read Alistair Campbell's evidence to the Leveson enquiry when it was up on the Guido Fawkes blog (since been taken down) but although I loathe AC it was a well written and very perceptive piece on the techniques used by newspapers to create stories around their own agendas. If you view pretty much any press piece put up here through that lens you can see how effective the techniques are. Much of what people believe about Europe in particular is coming from newspaper agendas, and it bears very little relation to the truth.

PaulW1965

The company I work for is preparing for a possible Euro currency break up.... :eek: Scary, scary, scary....might never happen of course... we don't have a plan for a swine flu epidemic....

purch

Siemens obtained a Banking licence in 2010, so I doubt very much it had anything to do with a potential Euro breakup, or for the sole purpose of depositing funds with the ECB. Siemens has been involved in Financial Services for a long time.

It's not unusual for large German multinationals to have their own Banking subsidiary. VW has had one for years.

On the other hand, any European multinational not planning for a potential change in the make-up of Eurolalaland, if not a total break-up would be failing it's shareholders in a big way.

michaels

Whilst certainly true it doesn't mean that public opinion does not also influence events, if everyone is convinced a recession is coming they will defer spending and investment thus triggering the recession. Similarly people rushing to take funds out of Greek and Italian banks and assets will precipitate those countries defaults.

julieq wrote: »

I don't know if anyone else read Alistair Campbell's evidence to the Leveson enquiry when it was up on the Guido Fawkes blog (since been taken down) but although I loathe AC it was a well written and very perceptive piece on the techniques used by newspapers to create stories around their own agendas. If you view pretty much any press piece put up here through that lens you can see how effective the techniques are. Much of what people believe about Europe in particular is coming from newspaper agendas, and it bears very little relation to the truth.

julieq

michaels wrote: »

Whilst certainly true it doesn't mean that public opinion does not also influence events, if everyone is convinced a recession is coming they will defer spending and investment thus triggering the recession. Similarly people rushing to take funds out of Greek and Italian banks and assets will precipitate those countries defaults.

That was in effect the point he was making. In a very fast changing world where newspapers are in competition with the internet and 24 hour news, they blast out stories without checking using various rhetorical devices - one of which being the question mark, so "Is this the end for the Euro? Eurozone companies planning for a post break-up future". Generally the impression left is reliant on the agenda of the newspaper, so most news becomes comment.

In one case he cited, which was (unsurprisingly) the Daily Mail, a sequence where a totally false story about an imaginary EU regulation was denied correctly by the EU was turned into a sequence where the story was announced "Now EU ban us from selling eggs in dozens!", the denial reported as "EU climbdown over new egg rule", and the whole thing trumpeted as a victory for campaigning. When what it was was a rumour being reported as fact and then taken down categorically: "we never said that and it's not in the legislation". The DM was somewhat exposed on this practice of shooting first and checking later when it accidentally published a complete story saying that Amanda Knox had been found guilty, complete with quotes.

And you can see how effective that is here. Daily there are news stories put up as fact, which when scrutinised really don't mean anything like what they're purported to. I suspect 3/4s of things board members here believe to be true about house prices and the EU (to take two examples) are coming through that filter.

It's easy to point the finger at the DM, but this is a universal trend, and it's killing democracy. The PR soundbite "repossessions soar 15%" has become far more important than the facts "in june, repossessions rose from 0.6% of the total outstanding mortgage stock to 0.7%". Even if you look at something like Occupy - the 1%/99% is the only real message, and everything else is implied, and the only common theme is some ill defined us versus them conspiracy theory. For the pensions dispute it's angelic nurses v. bankers. We've become incredibly superficial and easy to manipulate.

As few people know are prepared to work into the details, and any internet forum is full of people parroting these lines, it's very difficult indeed for a government to present hard truths. If someone is available always to say you could have it all were it not for bankers/the EU/fiat currency, why believe you need to have it hard?

Interesting subject. Will receive little attention here sadly. But well worth looking up demagoguery at wikipedia and applying what you find to the world we find ourselves in.

vivatifosi

julieq wrote: »

Much of what people believe about Europe in particular is coming from newspaper agendas, and it bears very little relation to the truth.

I try to run everything through the lens of Flat Earth News, written by the guy who led breaking the hacking story, Nick Davies. However it is rather bad news that both the FT and the Economist are now on the turn when it comes to the Euro. In fact, this week's Economist's front page shows the one euro coin as a flaming comet crashing towards earth, the corresponding article stating:

Yet the threat of a disaster does not always stop it from happening. The chances of the euro zone being smashed apart have risen alarmingly, thanks to financial panic, a rapidly weakening economic outlook and pigheaded brinkmanship. The odds of a safe landing are dwindling fast.

http://www.economist.com/node/21540255

Hoopie1

julieq wrote: »

I don't know if anyone else read Alistair Campbell's evidence to the Leveson enquiry when it was up on the Guido Fawkes blog (since been taken down) but although I loathe AC it was a well written and very perceptive piece on the techniques used by newspapers to create stories around their own agendas. If you view pretty much any press piece put up here through that lens you can see how effective the techniques are. Much of what people believe about Europe in particular is coming from newspaper agendas, and it bears very little relation to the truth.

I did laugh at Campbell when he said that parts of the British press were "putrid". Were those the same parts that him and Tony Blair spent years manipulating? The parts that keep asking questions about Dr Kelly?

julieq

Hoopie1 wrote: »

I did laugh at Campbell when he said that parts of the British press were "putrid". Were those the same parts that him and Tony Blair spent years manipulating? The parts that keep asking questions about Dr Kelly?

Quite, and as I say I loathe the man. But the points he made were well argued in the specific sense of using invention or speculation to drive an agenda by the press. And I guess he would know.

It's a shame it's been pulled down but worth looking for on a torrent site maybe.

Out,_Vile_Jelly

Julie, I think there is a link to his statement on the Guardian's blog of the Leveson enquiry. Ah, here it is: http://www.levesoninquiry.org.uk/evidence/?witness=alastair-campbell

chazzee

Sky news: Financial Services Authority urges British banks to prepare for a break-up of the euro; is this the FSA trying to be proactive for once?!