Models

For a long time, people thought our solar system revolved around the Earth. Copernicus (or Galileo to some) came around and proved the planets revolved around our Sun.

Models are important - they are the perspective of an individual's perception of any given event. Models are always biased, but the objective should be to choose a model with the least bias possible.

How is this achieved?

Scrutinize opposing aspects, think critically, and have an open mind.

"All Truth passes through three stages: First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident."

- Arthur Schopenhauer

Truth is stranger than fiction, but it is because Fiction is obliged to stick to possibilities; Truth isn't.

- Mark Twain


These opinions below may be my own or may belong to the authors whom I reference. They are posted for the benefit of mankind, so that we may collectively achieve a common ground and transition into a new golden era as seamlessly as possible.


Tuesday, May 29, 2012

Lloyd's of London Preparing for Euro Collapse




Reposted from American Kabuki


By Andrew Cave

2:50PM BST 27 May 2012


The chief executive of the multi-billion pound Lloyd's of London has publicly admitted that the world's leading insurance market is prepared for a collapse in the single currency and has reduced its exposure "as much as possible" to the crisis-ridden continent.

Richard Ward said Lloyd's of London could have to take writedowns on its £58.9bn investment portfolio if the eurozone collapses.

Richard Ward said the London market had put in place a contingency plan to switch euro underwriting to multi-currency settlement if Greece abandoned the euro.

In an interview with The Sunday Telegraph he also revealed that Lloyd's could have to take writedowns on its £58.9bn investment portfolio if the eurozone collapses.

Europe accounts for 18pc of Lloyd's £23.5bn of gross written premiums, mostly in France, Germany, Spain and Italy. The market also has a fledgling operation in Poland.

Lloyd's move comes as a major Franco-German provider of credit insurance for eurozone trade, Euler Hermes, said it was considering reducing cover for trade with Greece because of the risk the country might leave the eurozone.

When a company goes bust, it is often sparked by withdrawal of credit insurance for suppliers wanting to trade with it.

A spokesman for Euler Hermes, Bettina Sattler, told Bloomberg: "The outcome of the new elections in June remains highly uncertain. Consequently, the situation is further deteriorating. The risk of Greece exiting the eurozone has been revived.

"In light of the recent developments, Euler Hermes will most probably have to switch to a more prudent approach. [We have] maintained a high level of cover for [our] customers until today. But now we are confronted with a changing situation."

Lloyd's fears are likely to be shared by a number of European businesses, which are watching developments in Greece.

On Saturday, Juergen Fitschen, co-chief executive of Deutsche Bank, described Greece as a "failed state" run by corrupt politicians.

"I'm quite worried about Europe," Mr Ward said in one of the first admissions by a major UK business leader of the scale of the crisis that would be prompted by a eurozone collapse.

"With all the concerns around the eurozone at the moment, we've got to be careful doing business in Europe and there are a lot of question marks over writing business in the future in euros.

"I don't think that if Greece exited the euro it would lead to the collapse of the eurozone, but what we need to do is prepare for that eventuality."

Mr Ward says Lloyd's had been working hard on contingency planning and had the capability to switch settlement of European underwriting from euros to other currencies.

"We've got multi-currency functionality and we would switch to multi-currency settlement if the Greeks abandoned the euro and started using the drachma again," he said.

Lloyd's has de-risked its asset portfolio in recent years, with investments split equally into cash, corporate bonds and government bonds, mostly in the US, UK, Canada and Australia. "We have de-risked the asset portfolio as much as possible," he said.

The contingency planning comes as German politicians piled the pressure on Greece ahead of elections on June 17.

A conservative member of German chancellor Angela Merkel's cabinet said today Germany would not "pour money into a bottomless pit".

'On Sunday, Swiss central bank chief Thomas Jordan admitted his country is drawing up an action plan in the event of the euro's collapse.

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