The single currency is finished, says Jeff Randall. The debt bill is too high for the Club Med nations and they will have to leave the zone. Yeah ... but we've heard that before. This is a political, not an economic project, and the "colleagues" will do everything in their power to keep their "baby" alive - and some. So, were economics ends, politics takes over. They will ruin the economies of every nation in the EU rather than give up hope.

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Tractor production is at an all-time high however......

Don't even get me started on the grain figures......

Hrumph, grain figures, ie. worldwide harvests, will be important over the next five years. Perversely the biofuels malarkey has built slack into the system that can switch back to food for next years harvest?

More important is the "Buy Euros" idea. One could catch a serious cold if Germany (+ Holland, Austria...?) stepped out of the euro. This would leave Club Med in a single HEAVILY discounted 'holiday euro' and would effectively reduce their debt in real terms overnight. Holidays and holiday homes would becomes as cheap as chips(!) overnight also which would kick-start the defunct economies.
The big question is can Ireland raise enough "Sod the Euro" moderate independents in time for their GE??

The prison-like nature of the euro-zone, & the EU's one-size-fits-all approach, have together created this problem. Sensibly, countries that are fundementally uncompetitive in an inti-inflationary currency zone (eg Greece, & probably also Portugal & Spain) should be able to leave it, re-establish their own currency, & then (if they still wish to) return to the euro later. Other countries who've accumulated such huge bank debts (eg Ireland, & again Spain), should be able to leave it & re-structure these debts if they wish. Similarly countries that are so fundementally competitive (eg Germany, Netherlands, Finland etc) that their success endangers their uncompetitive brethren (eg Greece, Spain, Portugal, & potentially also Italy) or are suffering such political malaise that investors begin to doubt their economy also (eg Belgium), these very competitive countries should be able to go their own way to either return to their original currencies or to establish a new "hard euro, German mark, whatever. Anything else will fail.

But as you say, politics has become foremost, with Luxembourg's PM Junkers claiming that the euro must be saved to save the EU! What foolishness! The only way for Germany now is to save it's money is to say "No" to any more loans to the euro-rescue fund, & encourage countries in difficulty to leave - or leave itself! But will that happen? Not over the next few weeks, no. But might the situation deteriorate so far that the euro's end becomes inevitable? Yes, almost certainly. My bet is that later this year is too early - political efforts to support it will still be there. But how about in 2012? Probably!

And why is Britain dithering as to what role it should play? I suspect it's worried about all the money that British banks are owed by eurozone banks. Around 700 billion pounds, isn't it? Or is it more? And who knows what threats have been made about disregarding British interests in the event of a euro collapse have been made by EU officials, & French & German senior politicians?

Watchet

Is this the vultures circling to gather up the pickings from a shattering euro?

Despite Angie's rejection of any German change in its attitude to the Euro the crunch simply has to come. She is caught between a rock & a hard place: much, much more than any other country, Germany has to show that it is a good European; recent history has mandated it thus. German reunification achieved French (Mitterand) recognition only by pledging support for the Euro concept.
Unlike Britain (not in the Euro but for stupid reasons commited to shelling out for profligates.....Duh!) German politicians do actually pay attention to those who vote for them & the electorate is currently severely offgepissed.....something has to give & it will be Merkel or her successor.
Having lived high on the back of the German hog for so long, it comes as no surprise that the indolent beneficiaries of the largesse are now squealing...and who's to blame?

Californian court passes judgement on state utility proposed purchase of a wind farm. Is this a precedent?

"We reject the application because we find that the Manzana Wind Project is not cost-competitive and poses unacceptable risks to ratepayers. We find that the proposed cost of the Manzana Wind Project is significantly higher than other resources PG&E can procure to meet its RPS program goal. Moreover, it will subject the ratepayers to unacceptable risks due to potential cost increases resulting from project under-performance, less than forecasted project life, and any delays which might occur concerning transmission upgrades and commercial online date. As a proposed utility-owned generation project, ratepayers would pay a lump sum cost rather than a performance based cost for the Manzana Wind Project. Therefore, ratepayers would be at risk if the project underperforms. In particular, if the Manzana Wind Project fails to achieve production as expected for any reason such as construction delays or curtailments as a result of a collision with a California condor, shareholders face no risks while customers could incur increased costs. In contrast, under a power purchase agreement, project owners rather than ratepayers bear the risk of project performance...."

http://spectator.org/blog/2011/01/25/wi ... blows-away

This is a political, not an economic project, and the "colleagues" will do everything in their power to keep their "baby" alive - and some.

Agree. Agree Agree. But, what was that awkward little saying 'You can't buck the market' ?

With sufficient political will, government can. QE is a serious distortion of the market. And ultimately, the Soviet Union presumably functioned without bond markets ?


PE - do you see the socialists breaking ranks with The Project, or is this contingent on a form of nationalist politics emerging in Germany ?

I understand that more than 60% of Germans want out of the Euro....I would personally estimate the percentage to be much higher & it would follow (I am no expert) that this reflects the opinion of all Parties.
Germany, like Britain, has its Euroslime & troughers who currently support the status quo....but being taken for a ride encourages nationalism; sometimes of the nasty sort. That's my take FWIW.

From the Randall article:

Indeed it is. That thinking caused all the problems in the first place - Med nations being lent money at German rates of credit due to rampant hubris.

Well orders have collapsed in this country but exports are up; if the Euro goes down exports will collapse as well and the economy will be in real trouble. I blame the Conservatives who pushed the Maastrict treaty through after they had been warned that the thing would cause a financial crises when it collapsed. Now it is happening they are going to pretend it was nothing to do with them; it was set up by Major with idiots like Cameron in the background backing it. This is a Tory made mess

If The Eu are organising it she will bite the plug !

Is that the one coupled to the electricity supply?

This crisis of the Euro will be played out to the bitter end. This is because almost all the politicians, whether in government or in oppostion are in favour the common currency and/or the EU. How can this be otherwise? Even given the catastrophic finacial situation in Ireland the turkeys still voted for Christmas (http://www.independent.ie/national-news ... 12827.html) and passed the finance bill that will enslave the people of Ireland. The one wavering voter got the call from Brussels and voted as directed. This has been the way every time in Ireland. Get the vote wrong and you vote again until you get it right. Serves them right that they are now enslaved by the EU. They had the chance to breakout and failed to take their chance. In so doing they condemned all of us. Even in Switzerland, Norway and Iceland the political elite wanted their people to join the EU!

We in the UK will not get this chance because our politicians are equally set in continuing with this project come what may. They were not obliged to contribute to the illegal bail outs, or to back the Irish, or increase the capital of the ECB. Labour or Condems they went willingly along with the rest. The Germans will also go along with it all. Merkle may not like it, but if she goes the socialists will take up the challenge. The Germans will not get the chance to vote on leaving the Euro or becoming the paymaster of Europe. Their politicians have decided for them already.

This will drag on for a long time, until perhaps things get so bad that we have civil unrest in Spain, Italy or Portugal. It will not end without bloodshed.