Tags: JPMorgan | Europe | Default | market

JPMorgan’s Staley: Market Unprepared for Europe Default

Monday, 19 Dec 2011 02:52 PM

The U.S. and European financial markets aren’t equipped to handle a default by Greece or other countries in the euro zone, said Jes Staley, chief executive officer of JPMorgan Chase & Co.’s investment-banking unit.

“What’s going on with sovereign debt in Europe is very troubling,” Staley said on Bloomberg Television’s Inside Track With Erik Schatzker. He said it was notable when German Chancellor Angela Merkel said it “was not a good thing” to ask banks to voluntarily write down their Greek sovereign debt earlier this year.

“Raising the notion that a European government or any government would actually back away from its obligations is something that the market really is not set up to deal with,” Staley said. “Once you establish that a country in the euro zone can walk away from its debt obligations where does it stop?”

Staley said U.S. Treasury debt is still the safest bet for investors, even after its creditworthiness was downgraded by Standard & Poor’s in August.

“Hopefully, one of the lessons out of the 2008 financial crisis is nothing is risk free,” he said. “Triple-A securities are not cash, we’ve learned that. Sovereign debt isn’t without its risk.”

On a relative basis, U.S Treasuries “will continue to be the safest asset in the world and a downgrade in and of itself doesn’t really change the equation.”

JPMorgan, the largest U.S. bank by assets, is based in New York.


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The U.S. and European financial markets aren t equipped to handle a default by Greece or other countries in the euro zone, said Jes Staley, chief executive officer of JPMorgan Chase Co. s investment-banking unit. What s going on with sovereign debt in Europe is very...
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Monday, 19 Dec 2011 02:52 PM
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