MidnightWatcher – Prophecy in Motion

“CANNES—It may well be remembered as the day the euro zone began to break apart.

At a late night news conference in Cannes on Wednesday, German Chancellor Angela Merkel and French President Nicolas Sarkozy shattered the bloc’s most sacred taboo, conceding openly for the first time that Greece might end up having to leave the tight-knit currency club it joined a decade ago.

The admission, after an intense two-hour meeting with Greek Prime Minister George Papandreou on the eve of a G20 summit, sets the euro zone on a perilous course that could reverberate in Europe and beyond for decades.

Were Greece to leave the euro zone, a step that until now European officials have said is technically and legally impossible, the consequences would be devastating even though the country represents just 2.5 percent of the 17-nation currency area’s gross domestic product (GDP).

Just how devastating is difficult to say because the move would take Europe and the global financial system into uncharted territory.

But what does seem clear is that an exit would spark contagion to other peripheral countries as foreign investors pulled out en masse.” Read more.

Greece may leave euro, leaders admit – “The G20 is planning to increase the crisis-fighting firepower of the International Monetary Fund after the start of its summit was dominated by the first open admission from EU leaders that it might be necessary for Greece to leave the eurozone if the single currency is to survive. George Osborne said there was a “real sense of urgency” on a day that saw an emergency interest rate cut from the European Central Bank, backtracking from Greece over a referendum on its bailout conditions, and a recognition that the IMF may need extra resources to cope with a deteriorating global economy.” Read more.

Euro chaos: Britain prepares for worst – “Britain is drawing up plans to deal with the consequences of a possible collapse of the eurozone – including a fresh banking crisis – in the wake of the chaos in Greece. The opening of the G20 summit of the world’s most powerful economies in Cannes was overshadowed by the turmoil in Athens last night, as the Greek Prime Minister dramatically abandoned plans for a referendum on the European bailout deal in the face of furious opposition at home and abroad. But, amid growing fears that a Greek economic meltdown could spread through the rest of Europe, there are still concerns that the European plan brokered last week is not enough.” Read more.