Euro Meltdown
It's official. Britain's bankers have now been warned to prepare for a total meltdown of the European currency, the Euro. Although we are not part of it, our financial institutions have around 600 billion dollars tied up in Europe. That is serious money - especially if you risk losing the lot. But precisely which preparations they are expected to make to protect themselves is a complete mystery.
British industry relies on Europe and the Eurozone for customers. There are at least five British-based global firms with huge exposure if the currency collapses. Right now those companies are producing detailed emergency plans. Several have set up London "war rooms" to experiment with different disaster scenarios and test the speed and tenacity of their own executives. If they still have big reserves of cash they are now seeking much safer places to shelter it.
The British Government has alerted all its embassies in the Eurozone to get ready for Armageddon. This planning includes the possibility of widespread riots in some European cities if the Euro simply collapses. British people living abroad have been shifting their personal finances out of the Euro and back into British Pounds. Better the money you know and trust. Not that any of us can escape the crisis, or trust in anything much anymore. Which is why on Wednesday your Federal Reserve led a worldwide emergency intervention to increase liquidity in Europe's banks.
How humiliating -- the currency that was set up as a challenger to the dollar ends up falling back on good old Uncle Sam. It's just a short term band aid, because the long term problems haven't gone away. Greece, Italy, Spain and Portugal are all woefully in debt. Europe's politicians, so far, can't or won't agree a comprehensive plan. So everyone else has gone planning crazy. Our Treasury Secretary says things could get very much worse. The Governor of the Bank of England admits that he hasn't got a clue what will happen next. It is not blind panic yet, but it is getting perilously close. This is Ed Boyle for CBS News in London.