THE SLOG STICKS TO ITS VIEW THAT DEBT PROBLEMS IN THE EUROZONE WILL CONDEMN THE EURO TO MASSIVE DEVALUATION

A report compiled by BNP Paribas offers stark warnings today that the bailouts won’t end with Greece, and that Spain would be very expensive indeed to rescue. The Spanish bill could rise to €200 billion, according to BNPP’s calculations. The Portuguese mess would gobble up a further €30 billion, and the Irish, €35 billion more. In total, to rescue the debtor members will cost some €320 billion – 3.5% percent of the EU’s GDP: or, put another way, over three times the 2009 German budget deficit. And this doesn’t include the UK problem, as we are outside the Eurozone.

In a separate opinion piece for BNPP studied by The Slog, Philippe D’Arvisenet writes this week:

‘Observers of the Spanish situation must ask themselves if they can really believe the optimism of a country already crippled by house-price collapses and the need to negotiate budgets with autonomous regions. Also in Portugal, talk of recovery is rendered incredible by the very high scale of private debt – and the fact that the public spending accounts have not been moderated in this context.’

Agreeing almost entirely with the German Finance Minister, D’Arvisenet observes in conclusion.

‘The EU’s fiscal stability agreement has not been enforced with anything like the rigour required, and has effectively caused the Greek crisis….other States will tread very deep water unless this changes.’

The Slogger retains his opinion about the British and French currencies: the sheer scale of the Eurozone deficit problems (with neither Hungary nor Latvia even on the media’s radar as yet, although their problems are huge) means that, one enough currency traders have enough of this evidence to be convinced, the Euro will drop like a stone.

Either that, or Germany will force a major restructuring of the whole Union…in which case the major credit agencies will have an attack of the vapours too.