Euro-geddon

A MAJOR car crash has been waiting to happen for a decade. The moment of collision is close.

The Euro, initially eagerly embraced by those seeking an ever-closer union with our amigos across la Manche, is running out of road. A Greek exit from the currency has long been certain but recent events show the moment is now upon us.

I have argued for years that the Euro will fail. The straightjacket of a common currency applied across many nations that have to operate within the strictures of a common interest rate was always going to end in tears. Why? Because unless those economies are in fiscal and therefore political union — ie, have a united budgetary policy operated from the centre — then the interest rate that suits some countries will punish others, meaning unsustainable economic divergence.

So the Greek jalopy was thus burdened by the Euro and debt. It was consequently battered by a 20% reduction in its economy. It then hit a rock in the road — an inconclusive election in which the majority voted against parties supporting a bailout.

In a month's time it will hit an oncoming juggernaut when another election will see an anti-bailout Greek government. At that point the jalopy will be wiped off the highway altogether.

The consequences will not just be for Greece. Her crash out of the Euro could create a ruinous run on her banks with disastrous knock-on effects for the whole Euopean banking system. And a complete loss of already fragile Europe-wide business confidence. It may be a Greek jalopy that ends up a mangled wreck on the side of the road, but I am afraid, mes amis, it was the rest of us who were sitting on the back seat.