Den finansielle situasjonen i Club Med – Hellas, Italia, Spania og Portugal – er så prekær at Den europeiske sentralbanken snart kan stå overfor et kritisk valg: enten å bøtte ut penger i økonomier som allerede har altfor store underskudd, eller la dem synke, men med det ryker også deres medlemskap i eurosonen.
Men det finnes ikke så mye penger, selv i Frankfurt, til å redde land på land. Til syvende og sist må Tyskland tenke på seg selv.
Valutameklere skal ha veddet 8 milliarder dollar på at euroen kommer til å gå opp i limingen. Hva som da vil skje, vet ingen. Euroen er overbygningen over dagens politiske EU.
The eurocracy imagines that the spanking given to Greece about its deficit, and the promises by Mr Papandreou, its prime minister, about good behaviour in the future will be enough to stop any “contagion” with other countries in the eurozone.
I cannot see why this should be so. Spanish and Portuguese debt is on a par with Greece’s – Portugal’s, indeed, is even worse. Italy has less debt but has structural problems in its economy that could easily lead to widespread financial failure.
Ireland’s measures were so drastic that it could not afford the sort of stimulus through the tax system that might have helped prompt some sort of recovery, or at least an improvement in sentiment that might have led the markets there upwards.
Who is to say that that is not the pattern for the rest of indebted Europe? And who is to say that, should the contagion indeed spread to other, much bigger economies than Greece’s, the problem could not be paralysing and, as far as the euro itself is concerned, terminal?
The news yesterday that currency traders have taken an $8 billion (£5 billion) bet on the euro falling was surprising in only two regards: that they hadn’t taken it sooner, and that it was so small.
Perhaps because we live in an economy with its own weak currency, we take the defeatist view that the euro must always be comparatively strong. Yet the fundamentals are not there for strength, and this bears saying again and again.
Many of those countries in the system are only there because the rules on deficits have long ago been bent. The lender of last resort – Germany – is economically crippled.
Who in their right mind will bail out the poor relations of Europe?
The euro cannot survive if the national interests of EU countries are to prevail.