And so it goes on. The Euro crisis looms larger than ever. Six years since Greece hit trouble, financial contagion is still spreading. Britain can’t leave this unfolding disaster soon enough.
As Ambrose Evans-Pritchard highlighted in yesterday’s Telegraph, the Eurozone is set for its biggest crisis yet. The Target 2 payments system has facilitated a huge socialisation of debt.
Debtors in southern states (especially Italian banks) now owe northern bloc central banks, via the ECB, hundreds of billions of dollars – money that they won’t be able to repay. If – or rather when – they default, the aftermath will engulf the entire Eurozone.
The debt crisis happens in the context of a banking system that is already dangerously fragile, even in Germany and France.
Research published by the UKIP Parliamentary Resource Unit in 2015 found that major European banks were still dangerously undercapitalised, in spite of post-financial crisis banking reforms. The weakest of all was Deutsche Bank.
Then there’s the politics. Depending on elections this year and next, both France and Italy could attempt to leave the Eurozone. Either scenario would amount to a huge debt default.
Many British commentators look at Brexit as if it’s happening in a vacuum. They seem to assume we’re leaving a successful economic project that will sail serenely on.
That’s clearly not the reality. We’re leaving a failed political project that is heading for economic catastrophe – possibly, as Allister Heath suggests, even before Brexit negotiations are completed in 2019.
The EU is collapsing under its own weight. The sooner we’re out, the better.