Euro Crisis Rumbles On

Greece is at a standstill today as angry workers protest at the emasculation of living standards and available jobs. Never before has any country tried so drastic a reduction in GDP. The widespread expectation among economists not in a state of denial, is that Greece will have to default, no matter what. The big matter will be the impact on the balance sheets of banks around the world, but in particular in France and Germany and to a lesser but significant extent, the UK. Further bail outs of banks would then be very much on the cards; even another credit crunch is possible. If Portugal and Ireland lose the political concensus to carry on with their austerity programmes and default as well, a credit crunch is certain.

All of this is happening because the Euro is a currency without a government. This cannot go on. Either those in the zone will have to become a federal union or the euro will have to shrink back to a small number of countries willing to federalise their economic management. Both outcomes are said to be unthinkable. The stark reality is somebody has to start thinking. The mere fact of the crisis and its insoluble nature suggests that the Euro should be judged to be a failure already. Sorting out this mess cannot be put off for much longer.