Question of the Week: Outlook for the Euro Zone

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It has been an interesting question at our Buyouts Texas conference in Dallas, whether the European single currency will survive the current crisis, and what its impact will be on dealmakers in the United States.

In a couple of discussions that I have had with mid-market lenders here, the consensus seems to be that the crisis of confidence in the euro zone is sufficiently far removed from the markets that we care about that the impact will be small.

To which I have to ask: Really? Isn’t that what they said about the subprime mortgage bubble? And the dot-com bubble before it? It seems to me that a Greek debt default — or one by Italy — would quickly reach the banks in France and Germany, which are backed up by the European Central Bank, which is backed by the International Monetary Fund and the Federal Reserve (as a matter of practical practice if not by law or policy), and could pretty quickly sweep up domestic U.S. markets.

But maybe that’s just me. So I want to ask you, dear reader: Does the euro zone survive? Or does it crack up? When? And feel free to add your insights in the comment box.

Steve Bills is a senior editor at Buyouts Magazine. Any opinions expressed here are entirely his own. Follow him on Twitter @Steve_Bills. Follow Buyouts tweets @Buyouts. For information on how to subscribe, contact Greg Winterton at greg.winterton@thomsonreuters.com.