‘Ill-conceived’ eurozone is headed for disaster

AS THE leaders of Germany, France and Greece hold urgent talks today to discuss the growing eurozone crisis, financial markets quake at fears for the solvency of French banks and the possibility of a Greek default. A growing chorus is forecasting the monetary union's doom.
 
Eurozone ill-conceived

The whole concept of the eurozone was incredibly ill-conceived and it should now be disbanded, says former Tory chancellor Nigel Lawson. "The people who are responsible for promoting the eurozone venture in the first place ought to be ashamed of themselves. They are the architects of the most irresponsible political initiative that I can recall," he told BBC's Today programme.
 
Pre-Lehman atmosphere

Things aren't looking good, says Nils Pratley in the Guardian. There's an ominous "pre-Lehman atmosphere" in the markets - ricocheting share prices, Chinese whispers about Italian bond purchases, and squabbling from Germany as Chancellor Angela Merkel attempts "to undo damage caused by her ministers talking about an imminent Greek default".
 
The only certainty is that Greece will default, writes Pratley. The only hope is that it can be deferred until next year, "by which time the eurozone members intend to have their stability fund up to size".
 
Could Germany jump first?

The contradiction between a single currency and a multiplicity of national economic policies is generally accepted, says Anatole Kaletsky in the Times. "Normality cannot return until it is resolved by turning the eurozone into a much tighter fiscal and political union."
 
So Europe faces three possible outcomes. The inevitable: continuing chaos. The improbable: a break up of the euro by government defaults and bank failures in Greece. And one fantastical scenario, generally deemed impossible: German withdrawal from the eurozone. But in financial crises, "events can move from impossible to inevitable without passing through improbable".

Get ready for the storm

If Germany were to give up on the euro altogether, it would probably be the least painful way of unwinding it, says Richard Ehrman on The First Post. But whether the Germans decide to withdraw or not, "what happens next depends on them. If they dither for much longer, the risk of a catastrophic accident bringing the whole shaky edifice crashing down on all our heads, must be very high indeed."

That catastrophic denouement is looking increasingly likely, says an editorial in the Daily Telegraph. It is "plain as a pike staff that the euro needs to be reconstituted in a smaller, more sustainable form. The sooner these objectives are recognised, the better.
 
"As Europe's leaders are either in denial or, like rabbits, frozen in the headlights" the UK Government must be prepared "to counter the economic shocks that eurozone default and possible break-up will bring". ·