The Market Oracle
Aug 10, 2012 - 11:24 AM
By: DK_Matai
Until recently, it was a sign of political correctness not even to consider the possibility of a euro collapse. Investment experts at Deutsche Bank -- Germany's largest bank -- now feel that a collapse of the common currency is "a very likely scenario." Germany's second-largest bank -- Commerzbank -- has also flagged fears of a Eurozone collapse whilst bracing for a worsening of the euro-crisis. "The greatest downside risk remains an uncertainty shock from an escalation of the sovereign debt crisis, ie, the collapse of the monetary union," Commerzbank states in its latest quarterly report released this week, adding that it thought the risk was higher now than in autumn last year.
Italian Prime Minister Mario Monti has also warned of the “psychological break-up” of Europe if the euro crisis is not soon resolved. Spain and Italy, the two chief trouble spots, are threatened with a financial collapse that could tear the 13-year-old currency union apart and rock the global economy. The World Bank has also warned that the euro collapse could spark a global crisis. It isn't easy to predict how such a tornado would affect the global economy, but it's clear that the damage would be immense.
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