Nov 25

Credit Suisse sees ‘last days’ of euro at hand (MarketWatch, Nov. 21, 2011):

A meltdown of euro-zone government bond markets may be around the corner – and could end up saving the shared currency, contend economists at Credit Suisse.

In a research note titled, “The ‘Last Days’ of the Euro,” they warn that the end of the shared currency “as we currently know it” appears to be at hand. And while they don’t necessarily expect a breakup, “extraordinary things” are likely to occur by mid-January as policy makers work to prevent the progressive seizing up of all euro-zone sovereign bond markets potentially accompanied by escalating runs on even the strongest banks.

That scenario would mark a situation that couldn’t be fixed by the European Central Bank or by new governments in Greece, Italy and Spain. Instead, they argue, it will force France and Germany to strike a “momentous deal” on fiscal union “much sooner than currently seems possible, or than either would like.”

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