Morgan Stanley Warns Germany May Decide To Secede From EMU

Morgan Stanley Warns Germany May Decide To Secede From EMU

www.zerohedge.com

…and why it has become more likely now: Obviously, we have not reached the end-game yet. However, with the recent developments, such a break-up scenario has clearly become more likely, for two reasons. First, the lesson for other euro area members from the Greek bail-out package is that no matter how badly you violate the SGP guidelines, financial help will be forthcoming, if push comes to shove. This introduces a serious moral hazard problem into the European equation. Fiscal slippage in other Second, the ECB’s climb-down on its collateral rules regarding lower-rated bonds, which ensures

(visit the link for the full news article)

That would sure be EPIC... it would spell the end of the euro for sure.

I say, GO AHEAD GERMANY bring down the whole rotten EU! That would be win win win.

What are the signposts that would indicate our break-up scenario is in fact unfolding?

* First, watch fiscal developments in other euro area countries closely: Our suspicion is that the aid package for Greece lessens other governments’ resolve to tighten fiscal policy, especially in an environment of ongoing economic stagnation or recession.
* Second, watch ECB policy closely: If the ECB turns out to be slow in raising interest rates once inflation pressures return, this would be a sign of a politicisation of monetary policy.
* Third, watch the political debate in Germany: Support for Greece has been extremely unpopular and fears that the euro will turn into a soft currency abound. If the aid package for Greece, which so far is a backstop credit line, becomes activated, eurosceptic forces would receive a significant further boost. And, needless to say, if other countries also needed financial support, this would further strengthen euro opposition.

Bottom line: To be clear, we neither advocate a euro break-up, nor is this our main scenario. However, the risk that it happens is far from negligible and the consequences for financial markets would be very severe. Hence, investors ignore the euro break-up risk at their own peril.

www.zerohedge.com
(visit the link for the full news article)

reply to post by Vitchilo


Is it April first???? I got caught one year on one April fools day that France wasgoing to join the stirling since the Euro was so rubbish... I felt so silly afterwards.. face palm moment,,,

Anyway on a serious note WTF..

Who is trying to blackmail who and what are they after? leveraging that kind of threat is nasty..

thanks for the article..

[edit on 16/4/10 by thoughtsfull]

reply to post by Vitchilo
[mor

i agree that would be a good thing hopefully more countries decided to follow in their footsteps. ill pray for this

If they all Eu states follow suit we'll have a morden image of Pre-war Europe...

Hopefully this wont Alienate any nations who RELIE on EU membership for support.