By Boris Schlossberg
The euro tumbled at the start of trade this week after the Eurozone summit on Sunday failed to produce any coordinated response to the growing financial crisis in Eastern Europe. Instead, EU officials led by German Chancellor Angela Merkel opted for out for “case by case” country solution, refusing to provide any specific details at the present time.
The disarray in the European Union only served to stoke fears that the ultimate euro bear scenario of a fractured and fragmented Eurozone could soon become a reality. The great danger of ignoring the problem centers on the fact that Western European banks stand to lose the most, should Central European economies go into tailspin. With nearly $400 worth of consumer and corporate debt due to be rolled over this year, EZ financial sector could face massive write downs if consumers and corporate in Eastern Europe default on their mortgages and lines of credit most of which are denominated in Euros or Swiss francs.
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