By Simon Miller

Hedge fund boss John Paulson has warned his investors that the euro is structurally flawed and will eventually fall apart.

According to a letter seen by Bloomberg, a euro collapse could be triggered by a Greek default which would throw the world into recession and financial disorder.

Paulson wrote: “We believe a Greek payment default could be a greater shock to the system that Lehman’s failure, immediately causing global economies to contract and markets to decline.”

The warning comes as eurozone finance ministers meet to decide whether to delay the second bailout to Greece amid fears that it will renege on the deal following April elections.

The eurogroup is looking at options such as either delaying bailout funds until after the April elections or to split the austerity plan with private debtholders taking their haircut immediately.

Speaking to SWR2 radio before the eurogroup meeting, German finance minister Wolfgang Schaueble commented: "When you look at the internal political discussions in Greece and the opinion polls, then you have to ask who will really guarantee after the election that Greece continues to stand by what we are now agreeing with Greece. I am also not yet sure that all political parties in Greece are aware of their responsibility for the difficult situation their country is in."

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