Fitch Warns of ‘Cataclysmic’ Euro Collapse, World Economic Forum Warns of New 1930’s Era Depression

“The European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a ‘cataclysmic’ collapse of the euro, David Riley, the head of sovereign ratings for Fitch, has warned.

Speaking to investors as part of a European roadshow, Mr Riley said a collapse of the euro would be disastrous for the global economy, and while it is not Fitch’s baseline scenario, it could happen if Italy did not find a way out of its debt problems.

‘The end of the euro would be cataclysmic. The euro is a reserve currency,’ Mr Riley said overnight. ‘What would that do in terms of financial and political stability?’

‘It is hard to believe the euro will survive if Italy does not make it through,’ he said, adding that while many saw Italy as too politically and economically important to be allowed to fail, ‘one might also argue that it is too big to rescue.’

The warning pushed the euro down towards a 16-month low versus the US dollar.” Read more.

Global financial crisis threatens to drag the world back to the 1930s – “The financial crisis threatens to drag the world back to the dark days of the 1930s and wipe out the gains of globalisation, a hard-hitting report said tonight. In its annual assessment of the global economy, the World Economic Forum warned of a rising tide of protectionism, nationalism and protests as seen during the Great Depression. It blamed the ‘chronic’ state of government finances and the widening gap between the rich and poor as the world lurches from one crisis to another. The WEF, which holds its yearly meeting for leading politicians, economists, businessmen and academics in the Swiss ski resort of Davos later this month, said the ‘seeds of dystopia’ have been sown.” Read more.