Thursday, December 8, 2011

Is the Unthinkable Upon Us?

Today's WSJ's headline on planning for the demise of the Euro is sobering. Or is it? Touted as totally unthinkable just a few weeks ago, that leading institutions, including the august JP Morgan Chase & Co., already are suggesting that investors make contingency plans to protect portfolios says a lot.

Investors are being advised to hedge against "possible adverse moves" (READ: a possible collapse of the common currency), even though the probability of said collapse is only 20%, according to JPM. When "euro zone disintegration" and the "collapse of Lehman Brothers" appear in the same sentence, however, it gives us pause. Or it should.

Across the pond, the subject seems to be centered around how to print sovereign currency in the event of a Euro zone break up.

But on this side of the pond, there may be a silver lining. A serious fall in the value of the euro signals strength in the US dollar. Although, if the global markets are in free fall, that may be scant comfort.

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