CRASH 2: GURUS LINE UP TO WARN WORLD

It’s been a day of rumour, counter-rumour, locked doors, leaks and hot air in the eurozone. Is the imminent break-up of the eurozone all scaremongering bollocks and classic blogosphere Drama Queen stuff?

The five people below are heavy-hitting observers of, and players in, what’s going on. I’ve put together the quotes below, all of which were uttered in the last few days.

Mohamed el-Arian: “There are now clear signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap…The system is sending signals rather than making noise. It is warning about the highly uncertain and rapidly deteriorating outlook for the global economy; also, it is lamenting astonishingly inept policy-making in far too many western economies….We are here because of the interactions of three distinct, yet inter-related forces: poor economic growth, excessive contractual liabilities, and disappointing policy responses.”

George Soros: “Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation.”

Stefan Homburg, the head of Germany’s Institute for Public Finance: “The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable.”

Deutsche Bank CEO Josef Ackerman: “It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels.”

Jim Flaherty, Canadian Finance Minister: “Ultimately the whole world would be affected if there were a bank meltdown, a credit crunch, coming out of Europe. So this is a serious situation and it’s been serious for quite some time. It’s getting worse because of the continued uncertainty”.

Everyone has an agenda, but it is impossible to assert that all these people are biased and wrong. They are all making very pertinent points, and during the last 48 hours, the EU Establishment has not offered one single convincing counter-version: from Merkel and Sarkozy via Van Rompuy to Berlosconi and Schauble to Papandreou, there is no alternative reality that’s even remotely credible.

So it’s hard to avoid the conclusion that pretty much everything from here on in is somewhat unimportant: que sera, sera.

Tomorrow: Germany, the US, Russia, technology and geopolitics