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Eurozone set to fall apart one by one, warn top economists

04 December 2010 09:55 (UTC +04:00)

The experts predict that the staggering Â£70 billion bail-out of Ireland, underwritten by UK taxpayers, agreed at the weekend is doomed to fail.

One of the beleaguered so-called PIGS (Portugal, Ireland, Greece, and Spain) will be driven to abandon the single currency and within three years the rest of will be forced to follow suit.

The experts say that the four countries would be better off bowing to the inevitable and negotiating now an orderly exit from the Euro. This way they will avoid sparking a catastrophic new banking crisis throughout the West on a par with the financial meltdown of 2008.

They have agreed a package of loans to prop up Irelandâ€™s bankrupt banks and the imploding Dublin government, which is grappling with a ballooning budget deficit.
But the report, â€œCan the Euro Surviveâ€, warns that it is â€œalmost inevitableâ€ that despite the rescue package at least one of the debt-ridden PIGS will default on its debts, triggering a new crisis.

â€œA default by any member country is more than likely to trigger contagion to the rest of the periphery and to lead to the eventual exit from the Euro of Greece, Ireland, Portugal, and Spain.â€

But their problems are much more serious and deep-rooted because they are confronted by crippling debts brought about by chronic overspending and because their governments are incapable of imposing a spending clampdown on restive electorates.

The expert author, Professor Desmond Lachman of Georgetown University, Washington DC and a former high-ranking official in the International Monetary Fund, and Dalibor Rohac, a research fellow at the Legatum Institute, predict that the Irish bail-out, which costs the UK taxpayer Â£6 billion, will just be the first of many in a vain attempt to keep the Euro afloat.

Economist Desmond Lachman alerted the danger of the recent housing crisis well before it occurred, and has been making similarly chilling predictions for the Eurozone since its inception.