MidnightWatcher – Prophecy in Motion

The Market Oracle – “… All of the weak euro-zone countries are waking up to the fact that they have been in a state of denial because they are NOT Germany they cannot compete against Germany and therefore are only delaying the inevitable by remaining in a currency union with Germany that ensures their economies are also in a state of slow motion death spiral of economic collapse. In which respect they are in fact making the economic pain of their populations far worse as a consequence of dragging out economic collapse over many years rather than months as would have been the case had they had their own currencies and money printing presses such as that deployed by the UK that has successfully used smoke and mirrors inflation to mask the truth that Britain is in a far worse state in terms if indebtedness than most of the euro-zone countries.

Greece exiting the Euro-zone would crash the banking system as banks across the euro-zone start to fail domino style as a consequence of their direct exposure to 400 billion of Greek debt and counterparty risks which will put immediate pressure on all of the other weak Euro-zone members, with Spain and Portugal the next targets for exit as a consequence of these countries being on the same unserviceable debt fuelled economic collapse trajectories as Greece. In my opinion Spain and Portugal will both exit the Euro-zone within 6 months of Greece leaving so depending on the timing of Greece’s exit Spain and Portugal could also both leave the the eurozone this year…

The wild card is Germany for as I originally speculated over 2 years ago (May 2010). Germany may decide to alleviate pressure on the rest Eurozone by planning its own exit. However all this would amount to a desperate belated attempt to buy more time to slow down the rate of collapse of the Euro-zone so as to allow the financial system to better survive a breakup of the whole eurozone.” Read more.

Here’s How The Whole Eurozone Could Unravel In Just A Matter Of Months – “Paul Krugman has a gloomy post this evening explaining how quickly the whole Euro could unravel. It basically goes like this: Greece leaves the euro ‘very possibly next month.’ That would lead to a massive run on Italian and Spanish banks. There would be massive borrowing from the ECB to prevent a banking collapse. At which point Germany has to decide: Shoulder a major burden for the debts of Spain/Italy, etc., or let it all go. He concludes: ‘And we’re talking about months, not years, for this to play out.’ –  Read more.