Euro splits up - lose or lose big??

srcandas

looking around the economic world I get the feeling the majority feel somehow the Euro will survive simple because the alternatives are all too scary. There are reports of large deposits being moved between currencies (out of the Euro). People protecting their portfolios from a disaster. But no actual panic.

But what happens if on Monday after leaders burning midnight oil the conclusion is that the PIIGS should go to the wall and the new Euro will be for the rich - or some similar scenario.

Yes there will be havoc but the world will carry on turning. Companies will continue to produce. Beer sales will go up.

So to investors will it be that bad say a year down the line? Is it just a matter of having a long nap and waking up in 2013 and carry on as normal? Or will the impact be bigger?

Will stock markets suffer 50% losses? Will bond funds be blown away by defaults? Will the Pound, dollar, yen go up in value? Will german stocks look cheap?

Any thoughts beyond "it won't happen"

Mikeyorks

srcandas wrote: »

But no actual panic.

You haven't talked to my wife!

She adopts the ostrich philosophy when the markets are down - and only wishes to know when things are good to excellent. Which has made financial conversations a little one sided over the past 6 months. Despite our portfolios are 20% above what we put in - she is convinced I'm not taking it seriously when I shrug my shoulders concerning the 20% we are down from 6 months ago.

But I'm more concerned (market wise) at Israel's intentions towards Iran than the collapse of the Euro. As the former will make the larger bang .. and is probably the more inevitable.

srcandas

Mickey I don't tell the wife about bad news. Makes life easier. I'm sure you have yours under control

Although I posted this in the wrong bit I'm surprised there is not more response. I'm not criticizing the folk here; to get information it is a very fine foro indeed, but I note that slagging off IFAs gets a good response while to me interesting subjects get less. Perhaps I'm hoping for too much.

Anyway back to topic I have bailed my European today and am preparing for the worst. I remain very bond heavy, and those in sterling or emerging markets. Like everyone I hope I have called it right but if not it won't bankrupt me :cool:

Mickey not sure I can worry about Iran. I think it is factored in and if Israel does it then it will be one of those things. If the US & UK do it who knows it might set a revolution off. But anything is better than Iran throwing nuclear bombs about - and by the way I have Iranian friends who still have family there so I am not being "who cares".

Well should be an interesting week :beer:

jimjames

You need to consider the difference between the euro and european companies. The euro might collapse but that doesn't mean BMW will do the same.

I think the Euro breaking up is inevitable; the longer it is delayed the longer the problem will take to resolve. UK being pushed out of the ERM was the best thing that could have happened to us and Greece et al being competitive again would boost their economies although probably not short term.

srcandas

Jim interesting. I guess cash rich companies who export outside the Euro will be ok. But I can't understand who is going to need to distribute a new currency and how will it be done.

For example if spain exits the Euro it will need to survive a period of transition. Will not the limited funds left in spain exit PDQ?

In which case the Red Cross and the UN will be needed to feed the populous.

All very messy.

I hope it doesn't happen but like you, and with a spanish wife and spanish extended family I am very close to it, I think the Euro is doomed.

Sorry very depressing; enjoy your evening :beer:

inmypocketnottheirs

srcandas wrote: »

Jim interesting. I guess cash rich companies who export outside the Euro will be ok. But I can't understand who is going to need to distribute a new currency and how will it be done.

Interesting comment. I have a customer in the euro zone. Cash rich , acquiring failing businesses, publicly quoted, 80% of their business outside the euro yet their credit cover has been cut by 80%.

srcandas

inmypocketnottheirs wrote: »

Interesting comment. I have a customer in the euro zone. Cash rich , acquiring failing businesses, publicly quoted, 80% of their business outside the euro yet their credit cover has been cut by 80%.

Yes even if as a big player you have a reserve in dollars or whatever to ensure you can pay your suppliers and staff, and have stock piled raw materials, there are still the issues of your component suppliers functioning normally, a downturn in European paying clients, transport issues and civil unrest.

But I note there is still great optimism with markets slightly higher even though the UK for one could still put a spanner in the works.

I'm sure if they do get it together there will be a market celebration but I feel it will not last for long as people see the impact of draconian austerity measures.

But still a long way to go this week yet. :beer: