11/2/2011 - Krugman Warns of “Gigantic Bank Run”, “Emergency Bank Closing” and “New Lira”

Krugman Warns of “Gigantic Bank Run”, “Emergency Bank Closing” and “New Lira”

Paul Krugman’s latest post is extremely bearish and he warns that “things are falling apart in Europe; the center is not holding”
Krugman warns that this could lead to a “gigantic bank run” and “emergency bank closing”.
Not only does Krugman warn of a massive bank run and emergency bank holidays but he warns of the euro breaking up and Italy returning to the Italian lira and even warns of similar problems confronting France.
“The question I’m trying to answer right now is how the final act will be played. At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira.”
“Next stop, France.”
Uber Keynesian Krugman, has been one of the most vocal gold bears in recent years and his opinion on gold has been biased and uninformed.
It will be interesting to see if his attitude towards gold has changed given the appalling vista he is now warning of.
An important question we have posed for some time, “What price is gold in drachma, lira, pesetas, escudos and punts?“
What should the ordinary people in European countries do to protect themselves from currency debasement and devaluations?
Unfortunately, we may find out the answer to these questions in the coming months.

http://www.goldcore.com/goldcore_blog/krugman-warns-%E2%80%9Cgigantic-bank-run%E2%80%9D-%E2%80%9Cemergency-bank-closing%E2%80%9D-and-%E2%80%9Cnew-lira%E2%80%9D