This is the brilliant title for Simon Heffer's piece in today's DT. He articulates a number of the issues I have raised on this blog in recent days. Its nice to be ahead of the curve as we used to say in the BoE.
Heffer quotes Milton Friedman, the man who converted Mrs Thatcher to monetarism, and hence seeded Mrs T's much needed supply side reforms in the UK now sadly pissed away by 11 years of NuLabour and the preceding 6 years of John Major.
Friedaman said: "The Euro is going to be a big source of problems, not a source of help. The Euro has no precedent. To the best of my knowledge there has never been a monetary union putting out a fiat currency composed of independent states. Ther have been unions based on gold or silver but not on fiat money-money tempted to inflate-put out by politically independent entities." (A fiat currency is a paper currency whose notes act as 'money' only because a government says they are 'money'. It has no intrinsic value unlike gold or silver coinage.)
The EU political class is in total denial and squabbling amongst themselves with naked national interest the dominant factor. The three ways out of the Euro mess are:
Cut public spending and/or raise taxation. Electoral suicide for any government plus guaranteed riots across the EU.
Print money by the back door and hope the markets wont notice - unlikely but Almunia's so called 'solution' - see today's DT business section. This will go down like a lead balloon in Germany, shades of the end of the Weimar republic.
Get the German's to act as lender of last resort ie borrow huge amounts in the market on their name and credit rating and give the money to the less well off in the EU. The market would demand a huge premium for these Bunds and it would be electoral disaster for Frau Merkel. The Germans don't see why they should pay for corrupt inefficient European countries.
Managing an overall Euro FX devaluation is a difficult trick to pull off and would certainly attract retaliation from the US.
Add in the clear East West divide and you have a recipe for EU break up just as happened 1700 years ago to the Romans. As it says in the Bible, "The sun rises and the sun sets and there is nothing new under the sun"