Euro Disaster

Ambrose Evans-Pritchard has written a truly horrifying blog today about what will happen if Greece exits the euro. You can read it here. Is it too cynical to think that the figures produced in AEP's blog have suddenly become available at this time for the express purpose of putting the frighteners on everyone and in the hope that the Germans will agree to some relaxation of the fiscal compact, perhaps even to some fiscal transfer to Greece? As you will see from the AEP's blog the instigator of the figures is a Belgian, Eric Dor, who is Director of Research at IESEG school of Management in Lille. I know nothing about Mr Dor and his politics nor whether his figures are sound but if Greece were to pull out of the euro and default on its liabilities and if the new drachma were to trade at a discount of 50% to the euro then we will be in armageddon. With these thoughts in mind I attended a Chatham House event this evening the subject of which was 'Ever Closer Union? The Future of the European Project.' On the panel were John Jungclaussen the London Correspondent of Die Zeit, Kalypso Nicolaidis Professor of International Relations Oxford and Jo Johnson MP. The Die Zeit man seemed to think that Germany would agree to some form of growth plan but only along the lines Merkel has been working on for some months now and that there would be some kind of federation in the short term which would evolve into a something less close. He also thought that there would be a conjunction of Germany, the Benelux countries, Poland and possibly the Nordic states. The Professor thought that the EU would muddle through but there would not be closer union and Jo Johnson, who was impressive and is clearly someone to watch, thought that there would not be closer union at least not as far as the UK is concerned. It was unlikely that any of the panellists had read AEP's blog. If they had they might have said something different but I doubt it. The last question from the floor was why there was such EU worship. I have to admit I clapped the sentiment behind the question and much to my surprise two or three others joined me.