Better a Horrible End for Euroland, or Endless Horror?

• When will the horror show in the Eurozone end? I doubt it will survive past 2012!
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  Better a horrible end for Euroland, or endless horror? 
  By Ambrose Evans-Pritchard, http://www.telegraph.co.uk/ 
  While we are waiting for Mario and Merkozy plus, just a quick thought on one of the EMU break-up reports hitting my desk daily, and sometimes in twos and threes.
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  The Dutch bank ING has had another go at the numbers, calculating that the Greek Drachma would fall by 80pc against the D-Mark in a full-blown disintegration. The Escudo and the Peseta would fall by 50pc, and the Lira and the Punt by 25pc. Germany would suffer a “deflationary shock”.
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  The whole eurozone would crash into depression, with a GDP contraction of around 9pc in 2012 — Germany (-7.4), France (-9.1), Portugal (-12.7), Greece (-13.1).
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  Outside: UK (-5), Poland (-6.6), US (-0.2), Japan (-1.1). The price of oil would drop to $55 a barrel. The US would flirt with deflation. The contraction would continue into 2013, before gradually stabilizing.
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  “Events of the past year have proved beyond doubt that the Eurozone is far from a textbook `optimal currency area’. But this is an omelette that cannot readily be unscrambled ,” said ING’s Mark Cliffe. … His report is less dire than a UBS note predicting a 50pc collapse in peripheral GDP, and 20pc to 25pc in the core, but it still begs the question:
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  If the intra-EMU currency misalignment is so extreme that free floats would cut Greece by 80pc, and Spain by 50pc, it surely validates the eurosceptic argument that monetary union has become a preposterous and unworkable arrangement.
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  It will take hideous contortions to hold the system together for year after year if ING is close to right on these numbers, with perma-slump, endless austerity, and ever greater macro-economic absurdities, so why persist?
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  … for more click here!

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