‘This is the worst,’ Alan Greenspan says of British break from EU

‘This is the worst,’ Alan Greenspan says of British break from EU, by Christine Wang at CNBC.

“This is the worst period, I recall since I’ve been in public service,” Greenspan said. … “There’s nothing like it, including the crisis — remember October 19th, 1987, when the Dow went down by a record amount 23 percent? That I thought was the bottom of all potential problems. This has a corrosive effect that will not go away.”

The former Fed chairman said that the root of the “British problem is far more widespread.” He said the result of the referendum will “almost surely” lead to the Scottish National Party trying to “resurrect Scottish Independence.”

Greenspan said the “euro currency is the immediate problem.” While the euro and the euro zone were major steps in a movement toward European political integration, “it’s failing,” he said.

“Brexit is not the end of the set of problems, which I always thought were going to start with the euro because the euro is a very serious problem in that the southern part of the euro zone is being funded by the northern part and the European Central Bank,” Greenspan said.

With Britain out, that mainly leaves Germany to fund the south of Europe. It’s probably going to be too much of a burden, so the euro may fail. What happens when a major paper currency fails? All those contracts written in euros, all those holders of euros, what will be left? There is no country to stand behind the euro, and the old national currencies were converted to euros and no longer exist — can’t unscramble that egg. At least with gold, there is something tangible.