Eurozone at Cliff’s Edge

Will the financial crash of the trans-Atlantic system wait for European bankers and politicians to return from their August vacations? Don’t count on it.

With Greece and Spain both hanging by a thread, Sunday’s London Telegraph reported that Lord Rothschild himself has taken out a $200 million short position against the euro, “as fears continue to grow that the single currency will break up.” The Telegraph put this news in the context of the report, from earlier ths week, that Finland’s government is already preparing for the euro’s break-up.

Just how bad is it? Last October, Paul Tucker, the deputy governor of the Bank of England, who recently gained notoriety for overseeing the rigging of the Libor rate by Barclays and other banks, met with the chief executives of Britain’s largest banks and told them: “Gentlemen, you could all be out of business by Christmas,” according to the Telegraph, citing three sources present at the meeting. Tucker was warning about the havoc that the collapse of the eurozone would wreak on the British financial system, which would be far greater than the Lehman bankruptcy. “The meeting led directly to the creation of working groups at banks to gauge the potential for a full-scale collapse of the financial system.” Tucker, the Telegraph reports, is (still) “one of the front-runners to replace Sir Mervyn King as Governor of the Bank of England.”

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