Tuesday, December 13, 2011
European Corporations Are Preparing For the End of the Euro
One of the biggest problems facing the world today is the fact that most world leaders have little if any business experience. Those who do are inevitably investment bankers/ financiers who, while technically businessmen, have expertise primarily in financial engineering, NOT manufacturing goods or services that create actual job growth.
With that in mind, when analyzing what's happening in Europe, it's wise to consider what ACTUAL businesspeople are doing today with their corporations' cash rather than what leaders are claiming is true about the financial system.
Case in point, every other week we are told that Europe's problems will soon be solved and that the EU will be stronger then ever. If this is indeed the case, I wonder about the following story:
European CEOs Move Cash to Germany In Case of Euro Breakup
Grupo Gowex, a Spanish provider of Wi-Fi wireless services, is moving funds to Germany because it expects Spain to exit the euro. German machinery maker GEA Group AG is setting maximum amounts held at any one bank...
"A couple of weeks ago I would never have thought about having conversations on the probability of the euro disappearing, but now there is more speculation on such a scenario," Wolters Kluwer NV (WKL) CEO Nancy McKinstry said in a Nov. 29 interview at the company's headquarters outside Amsterdam...
Kingfisher Plc (KGF), Europe's largest home-improvement retailer, has considered plans for the possibility of a collapse of the euro region and will focus on cash generation to account for that possibility, Chief Executive Officer Ian Cheshire said.
These are REAL businesspeople who RUN corporations, preparing for the breakup of the Euro by moving their cash to Germany. Read the above article: it features executives from companies throughout Europe all of whom state they are preparing for a Crisis and the potential of a Euro breakup.
And if you think that politicians have somehow solved the banking crisis... read the following:
Eurozone banking system on the edge of collapse
If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank.
Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.
If a bank has to resort to lending out GOLD reserves in order to get DOLLAR funding so it can maintain liquidity... then it's on its deathbed. And this is happening in France, Italy and Spain RIGHT NOW.
It's time we admit the truth, the EU and its banking system are literally on the edge of collapse. Think 2008... for an entire region. And politicians are going to solve this mess with a March 2012 meeting!?!
The impact of what's coming will be TREMENDOUS. Europe's banking system is over $40 trillion in size. The EU, taken as a whole, is:
1) The single largest economy in the world ($16.28 trillion)
2) Is China's largest trade partner
3) Accounts for 21% of US exports
4) Accounts for $121 billion worth of exports for South America
So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).
Make no mistake, we're heading into a Crisis that will make 2008 look like a picnic. If you've yet to prepare for this, I suggest you do so now.
Labels: Collaps, Crash, crisis, Debt crisis, Default, Euro finished
