This blog has been calling for this for a while. Its taken a while with a lot of can kicking.
As the DAX immolates and the PIIGS bailouts appear dead entities, UBS have wtitten a hypothesis on the breakup of the EU.
Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change.
Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade.
The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war
Classic Hugh Hendry, 26th May 2010 (yes this is how long ago all this shit started):
I would recommend you panic.