ING, the Dutch Bank that bought Barings lock stock and debt for £1, has just published a report opining that the break up of EMU would lead to financial Armageddon, the worst crisis in modern history, devastate every country in Europe even Germany and might even be worse than the Lehman's bust. They say in the event of such a break-up the new Greek drachma might crash by 80% against the new Deutschmark.
Two questions. First how much PIGS' Eurozone debt does ING hold that it can't get rid off? Second is not their motive a simple political scare aimed at Frau Merkel's increasingly anti-Euro voters?
Mr A E Pritchard who features this story large in today's DT does not pose these questions and neither does Richard North in his EU Referendum blog today. Talking your book is standard practice in every bank Its a variant on where you stand on issues depends on where you sit.
Spreads on Greek debt have come in a bit recently from 8% to 7.5% but seem to be sticking there. Other PIGS spreads are also obdurately high even with the ECB waiving its own previous veto on purchase of PIGS bonds, which was the reason for the slight contraction in PIGS spreads.
ING is missing the big point. The Euro is, and always was, a political not an economic project. It will die on the streets of Athens, Madrid and Lisbon this autumn as national politicians increasingly will not be able to take the violent civil unrest on the streets of their capitals.