Despite the international move to protect the European financial system, the borrowing costs for debt-laden countries remain above sustainable levels, and Wall Street is preparing for the possibility of an Euro devaluation to U.S. $0.85 if there is a full-blown break up of the Euro zone. The effect on our home economy would “be worse than the collapse of Lehman Brothers…” ING said, and the U.S. would suffer from weaker economic growth and a decline in exports resulting from a fall in the $/€ exchange rate. Obviously, outcomes will vary if just Grecce and Italy, or just Germany, leave the Euro, and this revaluation will affect the U.S. accordingly. While many analysts don’t actually expect a full euro-zone breakup, they are scrambling to prepare their firms for the variety of outcomes they may face, and are relying on having greater cash on hand than was available in the 2008 panic.
http://online.wsj.com/article/SB10001424052970204826704577074773960813432.html?mod=WSJ_Deals_LEFTTopStories
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