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Guest Post: Plan B For "Breakup"
Submitted by Finance Addict
Plan B For "Breakup"
There were only two questions that mattered, going into the EU summit.
- Would leaders at the summit come up with any actions of their own to help end the immediate crisis?
- Falling short of this, would any of their actions give enough confidence to the European Central Bank to allow it step up its role and be a lender of last resort to all troubled eurozone countries, but especially to wobbly Italy? In other words, could the conservative ECB now give itself the greenlight to print euros and buy up bonds from the world’s third largest issuer?
The answer to the first question is very clear: NO. There are some rules agreed on forcing countries to have balanced budgets, but also some very sly features that could allow countries to flout these same rules with no fear of retribution. There was very little agreed in the way of promoting growth, which is really the only hope that the troubled countries have of escaping the debt trap. In fact, the austerity and budget measures actually work against growth. Dear Europe, when you find yourself in a hole the first thing is to stop digging.
The answer to the second question is, unfortunately, another question. “Who the heck knows?” Everyone was hopeful last week when ECB president Mario Draghi made some statements that were interpreted as signaling a quid pro quo: a fiscal compact from the EU leaders in exchange for substantial bond shopping on his part. However, on Thursday Draghi said that he was “kind of surprised” at this interpretation. Market participants did a collective facepalm when they heard this.
Very well, then. Time to consider plan B. What if. From Businessweek:
Contingency planning for an unraveling of the [euro] involves cutting investment, moving money to Germany, transferring headquarters to northern Europe from southern, and even going out of business, according to interviews with more than 20 executives.
Here’s a round-up of companies that have disclosed their what-if plans for a Eurozone breakup thus far. And for every one listed here there are who-knows-how-many-others that are unwilling to go on record about such a sensitive topic.
- British banks. According to Reuters the main banking regulator has told British banks to make plans for the event that there is a disorderly dissolution of the euro or an exit of some countries from the single currency.
- ABB, engineering company and one of the world’s largest conglomerates
- Novo Nordisk, the world’s biggest insulin manufacturer
- Wolters Kluwer, Europe’s largest tax and legal publisher
- Compass Group, the world’s biggest caterer
- Kingfisher plc, Europe’s largest home improvement retailer
- CRH plc, a maker of building supplies and Ireland’s biggest company.
- Grupo Gowex, a Spanish provider of Wi-Fi services
And companies are not the only ones. The Wall Street Journal made waves when it wrote that the Irish Central Bank was looking at its printing capacity in case it needs to start turning out pounds again. Witness how RTE reports the Central Bank’s studious completely-dodging-the-question-denial: “The Central Bank of Ireland has said it is not printing Irish punts and is only printing euro.”
I dare not predict what will happen next but it looks like lots of folks are planning for the worst.
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Looks like my FIAT is worth $50 more today, priced in gold.
it's all good, the bernank will soon commence with some fiat bombing and quickly deliver it across the pond to our socialist brethren.
Negative gold rider pattern is full
If the volcano you live under spews more that the occasional smattering of ash and if it is shaking the ground a lot more than usual, it might be prudent to have a bug out plan.
Abby Joseph Cohen of the squid just said the S&P is 30% undervalued. That's the sell signal, she's the best contra-indicator I ever knew. The S&P really is 30% overvalued. Sell, Sell, Sell.
Im sorry, $53
oops $55
I just converted a bunch of fiat into gold.
Thank you!
The "Plan" is death by 1000 cuts, inflation adjusted to 1,000,000,000,000,000 cuts.
Last Christmas, I gave you my heart but the very next year you tore it apart.
... this year, to save you from tears.... i'll give it to someone special, special :)
.... called silver and gold. (background chorus: Silver Bitcheeeezzz! x2 )
'I dare not predict what will happen next but it looks like lots of folks are planning for the worst.'
But it's gnawing at you. Admit it.
Anglos can't take the suspense, where as in the UK & US there is no real suspense. Just bad theater. Goldman + Barclays, the rest of you losers forward complaints to Timmy G.
A final question: do the fumes get us through Christmas?
Only if its glue
I picked a bad week to stop printing fiat.
so thoughts on Euro if breakup....
imediate collapse or rally then collapse...
love to hear opinions
imediate collapse :)
followed by tribal warfare
A Swan Dive....
The diver has taken his position on the high board, has already given it a test bounce to check the springiness in the board. The only question for the diver is this..... how deep is the water?
My IBM dividends arrived on time. I got bought out in 1975 and took the stock. Up 13x compaerd to gold, not counting the dividends. That stock put my kids thru veterinarian and medical school, and bought me a house f&c. My second best stock, Apple, well you know the story. Gold went up 6x during the same time period. I love the gold story, I just add a few unicorns and read it to my grandkids (their college is already in the bank).
So you flushed your gains down the college "education" toilet and your kids are now pimping for Pfizer. Congratulations!
in nutshell explains why this world is fucked.
The bank will not even thank you when they take away your grandkids' college.
well short term IBM is rolling over off the top of a terminal wedge with a 1st target of 181.. at that point fatboy uncle warren better step up and start buying (come on you little pussy i dare you buy buy buy!) or else it's going to $160 call me on it bitches !
Good to see you sponsoring the sponsor of the Holocaust.
Can we starting taking bets on the afternoon rumor of the day? Will it be the IMF or China bailing out Europe today?
IMF :)
Central bank intervention.
FOMC tmr.
Shorts beware.
With a low volume day like this Bernanke could sneeze and the press would go "HE SAID EASING! QE3 IS RIGHT AROUND THE CORNER!"
How about Plan C? When the first sovereign bolts and heads for the exits, everyone scrambles for their own self-interests. Hello D-Mark and all the rest!
http://vegasxau.blogspot.com
time for that ubiquitus MBA to apply for a job at the BIS
Everyone buys into the single-currency project, but nobody wants to pay for it. I still scratch my head at the attitude of Germany - they continue to come up with brilliant solutions to the problem from 10 years ago, like getting a smoke alarm when the house is already on fire and everyone's trapped on the top floor. The Eurozone leaders continue to find ways to circumvent the democratic process, in order to move ahead with their plans. Whilst I believe in democracy, I know that in certain situations, these must be suspended, when there is a need for bold controversial measures to stave off disaster, but what they are doing is neither. In fact, all it's doing is pissing off the electorate and making the economic situation worse.
As for France, and that poisoned dwarf, they desperately need to cling to Germany as the only hope for saving their banking system and their bloated welfare state. When Alain Juppe warned that crisis in Europe could lead to war, the desperation of France was plain to see.
No doubt Cameron handled things badly, but as others have said, if all he has done is get himself thrown off the Titanic, in the long run it may turn out to have been the best outcome.
"This sucker's going down"
"There was very little agreed in the way of promoting growth, which is really the only hope that the troubled countries have of escaping the debt trap"
I really hate this generally unquestioned trope. There is no escape from the debt trap except for default. Growth will not do it with government debt levels greater than GDP and overall indebtedness many multiples of that. Austerity for big trade and fiscal deficit countries is absolutely necessary. But even more important is that austerity is felt by the financial sector: major writedowns, restructuring and a reassessment of long-term promises to pension holders and other beneficiaries. I'd like to see perp walks and public hangings too, but real defaults would be a good start.
oct 1.3159 and nov low 1.3210
what after plan Z ???
QQ
I do believe the Eu has finally run out of rumors. 2.5 Yrs of fiat tap dancing has ended. What a show it was!
( still short 100% the SP @1275..00) riding the crazy train..
Of course the Fed needs to act as lender of last resort in a crisis, they’re really good at doing that, but then they never stop acting as lender of last resort…--Daniel Cloud
How can the Fed (and now the ECB?) be “good at” serving as the lender of last resort in a crisis when they won’t stop? Answer: the Fed (and now the ECB?) controls the quantity and the rate of the currency – in the beginning, in the middle and in the end, every time, all the time. To say that they are useful is to say that we need a tyrant.
“All of the money to accomplish these bailouts was made possible by the Federal Reserve System acting as the ‘lender of last resort.’ That was one of the purposes for which it had been created. We must not forget that the phrase ‘lender of last resort’ means that money is created out of nothing, resulting in confiscation of our nation's wealth through the hidden tax called inflation.—G. Edward Griffin
Continues Griffin: “All of the bail outs of previous years pale by comparison to the trillions of dollars pumped into the banks beginning in 2008 in response to the subprime meltdown. This huge amount of money will not come from the government or The Federal Reserve. It will come from the American consumers in the form of higher prices.”
How do the people redress their wrongs under an iron-fisted central bank control that can plunder them at will by money manipulation, like dogs at the disposal of their masters?
Revolt?!
Yes, we must arouse the American "rabble," as they call us, and destroy Goldman Central Control with our tongues.
Fibo for the next 6 hours.
On days like this I can not help to think of everything priced in Gold. Therefore my 3.5% gain on my entire portfolio coupled with a 3% loss in the 'value' of Gold makes me a VERY happy camper.
Short the Banksters where they live.. in the S&P! End this socialist/bankster hypocrisy.
Buy silver.. short the s&p.. repeat after me...buy silver..
Underneath the fog is the reality that nobody is in any position secure enough to bail out the rest.
In addition to the above mentioned illustrious list of companies, here's what Øystein Byberg wrote (HegnarOnline - 10/25/11) on the Motor of the Norwegian Miracle:
Freely translated by LMAO
Statoil ready for the euro-collapse
Statoil has made emergency plans in case euro area breakdown.
Morten Færevåg of Statoils’ ” Group Treasury” department has been responsible for creating a plan that will prevent the company from being “lying down for the count” by a collapse in the euro zone, says DNI.
-We are ready and able to handle the worst case scenario. I think particularly of what may happen in the euro area if for example the euro collapses, he says.
- We are extremely well positioned and have a good supply of liquidity in the foreseeable future. This plan applies to Statoil as such. As far as the financial aspects are concerned, we have made some adjustments to the portfolio. It is controlled by a clear long-term, relatively conservative, investment philosophy. At the same time we have, due to the turmoil in the banking industry and the markets, made it even more conservative. This applies both to maturity and credit risk dimensions. Both of which, we have adjusted already, says Færevåg.
Tyler Durden: I have got to tell you one of the most annoying issues about Zero Hedge is the Picture of Obama in the add section that comes up. Even one picture of that mug on this site or any other web site automatically swells a hate inside me that forces me to leave.
Please get rid of that terrible add with the face of Obama on you web site.
It is your internet surfing habits that conjures up that image. You should probably stop visiting political websites (I'm guessing that is it).
Or just use Ad-Aware for free.
Truth is, I never go to political web sites for exactly the same reason, OBAMA's Ugly Mug. But that is not the only Mug that prompts such deep hate inside me, McCain, Pelosi, and many others. I know I am not alone with these emotions, but I can not find in myself any foregiveness.
Does anyone else find it ironic that the advertisement on the side of this page was for a "AR 15 Scopes.com"?
As far as I am concerned the only plan for a Eurozone breakup is to buy gold and firearms.