Stick a Fork in it; the EU is dead

[JimBowie1958]

This list of banks in Europe being reviewed by Moodies and like to get downgraded to junk is pretty long and has some major players in it.
Complete List Of Europe's Expanded Bank "Junk" | ZeroHedge


This shows how exposed Allianz and Generali are to a Greek default. They are described as the AIG to the above list of Lehman's-soon-to-be.
A&G's AIG Moment Approaching: Moody's Downgrades Generali, Cuts Megainsurer Allianz Outlook To Negative | ZeroHedge


John Taylor warns of the coming disaster that is now unfolding befoe our eyes.
"Lehman 2.0" Imminent Warns John Taylor | ZeroHedge

The world is as blasé about a Greek default or departure from the euro as it can be – credit spreads are dropping, the other weak Eurozone sovereigns are financing themselves easily, and everyone thinks the LTRO has solved the problem for the next year or two. Why should we worry about Greece? Who cares if their unemployment is 20.9% and climbing very fast, or that it is now in its fifth year of declining GDP? Let’s teach them a lesson!

Hubris is at the heart of this. Everyone says this cannot happen – we won’t allow it. Says who? The EU says: if it is written in an agreement, it must be totally correct, unchangeable, and followed at all costs. New realities can’t intervene and no slippage is allowed. Why the Germans are so sure that they know the future is beyond me. They are fallible too, but they won’t admit it, and the Greeks can’t make them budge. Haven’t they looked around? Santorini has a different economic and social cost structure than Wiesbaden. Humanity (and common sense) seems totally lacking in the negotiations with the Greeks and a violent backlash would be totally understandable.

Why the countries that have been fattening up their current account surpluses selling products to Greeks, whom they should have known were basically broke – just as they always have been – should be paid 100% on the euro is beyond me. Major losses should apply not only to sovereign borrowings but also to accounts receivable for cars, electronics, and other consumer goods. The market has not opened its eyes to the impact this Greek unraveling will have. The Eurozone will be mortally wounded and the world will suffer a significant recession – maybe as deep as 2008. European banks will lose much of their capital base and many should be bankrupt, but just as in the Lehman aftermath, the governments will try to save the banks and the banks’ bondholders, solvent or not. As the bank appetite for Eurozone sovereign paper will be decimated, austerity will probably follow shortly, followed by deflation and uncontrollable money creation. The European recession should be one for the record books.

And Europes recession will drag China into the gutter and the US not too long after that and then everyone else in the world.

This will be a double bang recession that will truly set a record for economic depressions.

 

[zzzz]

And add to that the volatile situation in the gulf with Iran and we are facing a very possible prospect for an economic meltdown this fall ... which by the way would doom Obama's Presidency.

 

[Baruch Menachem]

The EU, No. The Euro, maybe.

As long as there is no run on the banks, they should be ok

 

[JimBowie1958]

The EU, No. The Euro, maybe.

As long as there is no run on the banks, they should be ok

You really think that the EU can survive the disintegration of the European Monetary Union?

I cant see how the EMU can survive the destruction of the Euro, and I dont see the Euro getting through this. There will be such a chain-reaction of Generali and Allianz falling due to huge cycle of margin calls causing defaults then recursively causing more margin calls, etc, that will just overwhelm the values of these banks, and they go under draggin Generali and Allianz with them in a storm of dirivitive contract hail, sleet, blizzard and floods.

With all that bankruptcy going on, and the nations of the EU bailing out the banks as their behavior so far would suggest, how does the Euro survive? How does the EMU survive?

And the EU without a Euro or an EMU?

I wish I could share your optimism, I really do.