End of the Euro: $185 Trillion Derivative Market “Will Be in Turmoil”

Peter Boone and Simon Johnson have the most alarming article I’ve seen yet on the collapse of the euro. It reads more like a confident prediction than a hypothetical worst-case scenario:

The End Of The Euro: A Survivor’s Guide


A disorderly break-up of the euro area will be far more damaging to global financial markets than the crisis of 2008. In fall 2008 the decision was whether or how governments should provide a back-stop to big banks and the creditors to those banks. Now some European governments face insolvency themselves. The European economy accounts for almost 1/3 of world GDP. Total euro sovereign debt outstanding comprises about $11 trillion, of which at least $4 trillion must be regarded as a near term risk for restructuring.

Europe’s rich capital markets and banking system, including the market for 185 trillion dollars in outstanding euro-denominated derivative contracts, will be in turmoil and there will be large scale capital flight out of Europe into the United States and Asia. Who can be confident that our global megabanks are truly ready to withstand the likely losses? It is almost certain that large numbers of pensioners and households will find their savings are wiped out directly or inflation erodes what they saved all their lives. The potential for political turmoil and human hardship is staggering.

Read full article here.

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2 Responses to “End of the Euro: $185 Trillion Derivative Market “Will Be in Turmoil””
  1. Sounds a bit like he’s saying Europe’s losses may be our gains?

  2. Don Pelton says:

    I don’t know where it’s all heading, but here’s one guy who thinks we’re on the verge of the “biggest banking crisis in world history:”

    “The End Game”

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