U.S. Companies Brace for an Exit From the Euro by Greece
Source: NYT
Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece will soon be forced to leave the euro zone.
Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.
No one knows just how broad the shock waves from a Greek exit would be, but big American banks and consulting firms have also been doing a brisk business advising their corporate clients on how to prepare for a splintering of the euro zone. That is a striking contrast to the assurances from European politicians that the crisis is manageable and that the currency union can be held together. On Thursday, the European Central Bank will consider measures that would ease pressure on Europes cash-starved countries.
JPMorgan Chase, though, is taking no chances. It has already created new accounts for a handful of American giants that are reserved for a new drachma in Greece or whatever currency might succeed the euro in other countries.
Read more: http://www.nytimes.com/2012/09/03/business/economy/us-companies-prepare-in-case-greece-exits-euro.html?pagewanted=all
unblock
(52,205 posts)as contingencies to handle exits of countries from the euro.
being contingency plans, they don't just single out greece.
RKP5637
(67,107 posts)unblock
(52,205 posts)say greece exits. on the one hand, it affirms that it's possible to do so. on the other hand, other countries might try like hell to delay doing the same to see how greece fares in the ensuing mess.
odds are a greek exit will mean mayhem for 2 or 3 years as the euro is replaced with a new, plummetting drachma, and business agreements across the country are renegotiated, many ending up in litigation. but after 2-3 years of pain, they'll end up with a currency devalued enough to stimulate exports and restore some stability to the economy, much as happened to iceland.
if spain, italy, and portugal go for the wait-and-see approach, it's possible that they (and europe in general) may have solved their problems by then anyway. but if greece sees light at the end of the tunnel while the other countries are still in a pickle, then they're certainly likely to say, hey, if it worked for greece....
davidpdx
(22,000 posts)The effect would be to rip apart the EU. Besides dealing with debt, all the trade deals between the EU and countries would probably be in jeopardy as well. So many implications worldwide.
formercia
(18,479 posts)and proved that no Bank is too big to fail.
Socialize profit and privatize loss.
You break it, you buy it.
Pharaoh
(8,209 posts)Like Iceland, just say no to greed and toss them to the side. They are just bloodsuckers......
CountAllVotes
(20,868 posts)lovuian
(19,362 posts)and the debt is not payable
this will happen to Spain Portugal and Italy
the saga continues
until a clean slate can be restored the economy will go no where but depression