Interesting analysis from European Voice today:

Some members of the European Monetary Union (EMU) – Ireland and Greece obviously, and Italy, too – are discovering that what the International Monetary Fund (IMF) adjudges a global recession is cruelly exposing their failure in the past ten years to adjust to the rigours of membership of a currency union…

But the idea that any country will quit the EMU unilaterally, while it remains a hard-currency club, is mindless.

Long before the printing presses could be greased up to produce reams of new lira, drachma or punt notes, or ‘secretly’ asked businesses and financial institutions to re-programme their computers for a new era of monetary independence, the stampede of deposits from the banks to safer havens offshore would have triggered an economic meltdown. Forget it. The mechanics of leaving the single-currency area unilaterally and out of weakness, notably the pain of the transition to a new currency regime, make it all but inconceivable.

We are, however, already witnessing the beginnings of a process through which the bright hopes for the single currency of a decade ago could begin to dim. One expert calls it the “re-nationalisation” of EU financial market regulation…

Gordon ‘beggar thy EU neighbour’ Brown, the UK prime minister, has led the way in implementing a 1930s-style competitive devaluation to back up his “British jobs for British workers” jingoism…

Protectionism is rife and Neelie Kroes, the European commissioner for competition, is finding she does not have enough fingers to plug the holes in the dyke that the EU constructed long ago to prevent illicit state aids swamping free competition.

Naturally enough, worth reading in full.