It looks like you're using an Ad Blocker.
Please white-list or disable AboveTopSecret.com in your ad-blocking tool.
Thank you.
Some features of ATS will be disabled while you continue to use an ad-blocker.
Banks, companies and investors are preparing themselves for a collapse of the euro. Cross-border bank lending is falling, asset managers are shunning Europe and money is flowing into German real estate and bonds. The euro remains stable against the dollar because America has debt problems too. But unlike the euro, the dollar's structure isn't in doubt.
Banks, investors and companies are bracing themselves for the possibility that the euro will break up -- and are thus increasing the likelihood that precisely this will happen.
There is increasing anxiety, particularly because politicians have not managed to solve the problems. Despite all their efforts, the situation in Greece appears hopeless. Spain is in trouble and, to make matters worse, Germany's Constitutional Court will decide in September whether the European Stability Mechanism (ESM) is even compatible with the German constitution.
There's a growing sense of resentment in both lending and borrowing countries -- and in the nations that could soon join their ranks. German politicians such as Bavarian Finance Minister Markus Söder of the conservative Christian Social Union (CSU) are openly calling for Greece to be thrown out of the euro zone. Meanwhile the the leader of Germany's opposition center-left Social Democrats (SPD), Sigmar Gabriel, is urging the euro countries to share liability for the debts.
On the financial markets, the political wrangling over the right way to resolve the crisis has accomplished primarily one thing: it has fueled fears of a collapse of the euro.
In effect, the bankers are sketching predetermined breaking points on the European map. "Since private capital is no longer flowing, the central bankers are stepping into the breach," explains Mayer. The economist goes on to explain that the risk of a breakup has been transferred to taxpayers. "Over the long term, the monetary union can't be maintained without private investors," he argues, "because it would only be artificially kept alive."
The fear of a collapse is not limited to banks. Early last week, Shell startled the markets. "There's been a shift in our willingness to take credit risk in Europe," said CFO Simon Henry.
Particularly large amounts of money have recently flowed into German sovereign bonds, although with short maturity periods they now generate no interest whatsoever. "The low interest rates for German government bonds reflect the fear that the euro will break apart," says interest-rate expert Burkert. Investors are searching for a safe haven. "At the same time, they are speculating that these bonds would gain value if the euro were actually to break apart."
Indeed, investors are increasingly speculating directly against the euro. The amount of open financial betting against the common currency -- known as short positioning -- has rapidly risen over the past 12 months. When ECB President Mario Draghi said three weeks ago that there was no point in wagering against the euro, anti-euro warriors grew a bit more anxious.
"We have experienced a big dip in trade since the games began," says William Jones, who runs the T-Shirt Store in Covent Garden. "It is really quiet - the media and Transport for London have scared everyone away. Usually at this time of year we get lots of tourists, but our turnover is down 30%."
Originally posted by surrealist
reply to post by Bluesma
Huh? Some of the most doomsday coverage actually comes out of European media.
Originally posted by Trolloks
In the UK, we have a big risk of going under. Once all the Olympic 'feel good' factor starts to go, people will realise (many already do) that the Olympics was a HUGE error, it has ran this country dry, some just dont realise how dry the UK is financialy yet.
Originally posted by Trolloks
Our trade defecit has been the worse since 1997, just today I seen on the news that the Coventry Stadium (which was used for several olympic football match's) is in deep s**t because they haven't paid their ground rent, they simply can't afford to, and they just had the olympics which was meant to bring money.
Originally posted by Trolloks
The London High street has taken a hit too due to the olympics
"We have experienced a big dip in trade since the games began," says William Jones, who runs the T-Shirt Store in Covent Garden. "It is really quiet - the media and Transport for London have scared everyone away. Usually at this time of year we get lots of tourists, but our turnover is down 30%."
Again, that was largely down the Olympics putting people off shopping. It does raise the question on whether other shopping destinations faired better as a result? We see the same thing on a smaller scale in Reading every year with the festival. So many smelly hippies come to town, the residents stay clear of the shopping centres for the most part.edit on 28/8/12 by stumason because: (no reason given)