Full Euro Breakup Would Hurt Even The Mighty GermansThe deteriorating situation in Europe has dragged down stocks around the globe. And it could get much, much worse, according to an analysis by Fitch Ratings. The bond-rating house recently handicapped a variety of outcomes, from total fiscal and political union – unlikely – to a breakup that would mean total Euro-geddon – also unlikely, but devastating if it happens.
Each scenario has implications for companies doing business in Europe, since even a disorderly exit of Greece from the European Union is likely to knock the Euro economy back into a multiyear recession as deep as the one in 2008-2009, Fitch says. The only consistent losers across all scenarios, however, are big, slow-moving utilities and telecommunications giants. Companies with significant operations outside Europe and anybody selling alcoholic beverages is likely to do just fine under all but the worst conditions.  Supply chains would remain broken for several months as companies rework the terms of trade and trade unions in Southern Europe disrupt ports, railroads and trucking lines. Weaker nations would impose capital controls, driving companies with debt denominated in other currencies into default as they run out of Euros, pounds or dollars to pay their bills.