Monday 22 March 2010

As I said long ago now, Greece will be calling the IMF. They won't be alone.

Most recently, here. They will also likely have no choice but to leave the Eurozone, so that they can revert to Ye Olde Drachma and then they can devalue it in order to inflate away their existing debts. There is no other mathematically plausible solution, that I can currently see.

Spain, Portugal, Italy, Ireland, maybe even France ultimately, are likely to share a similar fate. All in good time. You can only overspend so much of other people's money, and all of these nations have gone wild promising the earth to their voters over the years. At some point, the party has to stop and the hangover has to be worked through.

In the UK we have made all the same kind of unpayable promises, but at least we have retained monetary and fiscal independance -- praise god that we managed to stall entry into the Eurozone, or we would be neck deep in trouble like Greece right now. I hope you can all see that there is no way we should be shackling ourselves to that kind of quazi-federal system! In fact, if we had joined, it might well be us all over the papers right now rather than Greece.

Our current debts, and future debt obligations, are crushingly heavy - just like all of our socially over-generous friends across Europe (and elsewhere in the world, mentioning no names, cough-USA-cough). But at least we still have the local option of devaluing the Pound to at least gradually dissipate the sting of what is still to come. It will still smart for sure though. A lot. It is unavoidable, whatever Gordon Brown might attempt to have you believe over the coming months.

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