The entire world now sees what was warned about here and in many other places. It is more destabilizing than any previous currency system, and holds as its lynchpin the collective guilt of Germany, which is quickly evaporating.
Nov. 16 (Bloomberg) -- Who's next? First Greece went bust.
Now Ireland is on the brink of a bailout from the European Union
and the International Monetary Fund.
When it happens, we'll hear plenty of soothing words about
how contagion has been stopped, the euro area has been put on a
firmer footing, and the single currency saved. There will be a
lot of grand rhetoric about the importance of the European
project. Stern condemnations of the speculators will ring out
across the continent.
Don't listen to a word of it. The euro has turned into a
bankruptcy machine. Once the markets have finished with Ireland,
they will simply move on to Portugal and Spain, and after that
to Italy and France.
There is a domino effect at work, and, with each rescue,
the fault lines within the euro grow wider and wider. This
process isn't going to stop until the euro is taken apart.
The Irish crisis is far more serious for the euro than the
Greek one. The only thing that can rescue the former Celtic
Tiger now is a clear and straightforward commitment from the
rest of the euro-area nations to salvage the country's economy.
No doubt that will be forthcoming. Tens of billions of euros
will be thrown at shoring up confidence in Ireland's finances.
But it is very hard for the single currency's remaining
supporters to explain why it has come to this. The Greeks
fiddled their way into the euro. They should never have been
allowed on board. And once inside, they should have been told to
reform fast or get out again.