Next Stop Portugal

John Redwood has a good post today on why the Euro was always doomed:

...there isn’t one interest rate that is right for Manchester and Marseilles, nor is there one exchange rate that is right for Lisbon and London. “You cannot have a single economic policy without a single budget”. “There will be endless disagreements about how much European government should spend and where.” “The poorer and richer regions are different. The poorer ones will lose out”. “There is no single political system to take decisions and explain them to electors”.

Unfortunately the EU will cling onto their sacred currency for as long as practically possible, regardless of the economic consequences, but it's obvious where this is all going to end up.

Ireland will be bailed-out despite the reluctance of Irish politicians, such as Ireland's Minister for European Affairs, Dick Roche, to use that term; the pretence is all but over bar the bluffing. All we wait for now is details of the price that Ireland will have to pay for the money. Taoiseach Brian Cowen claims that Ireland's sovereignty is unaffected (was he Heath in another life?), the reality is a little different.

So the situation will return to 'normal' and plenty of spin that the Euro will have been saved. But not quite. Any relief would be short-lived as the focus will then turn to the next-weakest peripheral nation; Portugal, Italy and particularly Spain. And when this happens it's game over for the Euro.