The end of the Euro could be weeks away.

November 29th, 2011 § 0 comments § permalink

This article from The Economist The euro zone: Is this really the end? paints an austere picture of how things will play out in Europe if Germany and the European Central Bank (ECB) don’t change course, and do it quickly. The worldwide repercussions of such an event would make the 2008 housing crisis look like a practice round for the main event; a 2012-?? global depression.

It has always been a somewhat distant concern but time is running out. Toward the end of January Italy must refinance €30 billion ($40 billion) of bonds which the markets may reject. If the ECB doesn’t step in we could be looking at the world’s third-biggest sovereign borrower going into default.

The Economist argues that to avoid such a catastrophe Germany needs to stop worrying about the moral hazard of taking on the debt of less prudent nations. These countries, they argue, are already on board with austerity measures and the alternative, a Euro collapse, is far to dangerous to risk.

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