The EU spin machine is at full speed promising a Greek bail out paid for by the Germans and French but not directly or maybe not at all, Things are now coming out in the open that were swept under the carpet to launch the Euro. Greece cheated on the fiscal stability rules but so did Italy, Belgium etc. The Finnish commissioner quite openly admitted that the Euro was a political project needed to drive the EU superstate forward. Small countries that have had to suffer centuries of invasions from their larger neighbours are always the keenest on the EU as they mistakenly believe it will save them from further invasions. It won't. Future invasions will be financial not military.
I have no doubt the EU can cobble together a solution to keep Greece from default and leaving the Euro. But at what cost? Merkel's government could be fatally wounded. An EU IMF will require another Treaty plus a probable Referendum. The EU will avoid this at all costs. It would open up Pandora's box. Every EU state has a wish list from the UK to Spain. The other PIGS would want similar treatment to Greece, a big problem for the EU. The Euro is fatally flawed and gives us the best hope of the whole EU project unravelling.
The hedge funds and speculators will be blamed just as Harold Wilson blamed the gnomes of Zurich in 1967 for Sterling's demise. It was not true then and it is not now. The blame begins and ends with the politicians.
More important to us is the huge UK deficit. It is off Greek proportions and Sterling is already in free fall with the Bank of England leading it down. Darling is in crucial talks this week on the proposed EU directive on regulating hedge funds. We have no veto on this, Blair gave it away. If the EU gets its way on this then prepare for a mass exodus from the City of London probably to Zurich in the first instance. When things start to hit London government and establishment opinion changes. The IRA proved that!