A short guide to the euro crisis

Ambrose explains.

The root of the euro crisis is a 30pc intra-EMU currency misalignment between North and South. That structural flaw cannot be solved with debt guarantees or bank rescues.

Nor can this gap in competitiveness be bridged by austerity alone, by pushing Club Med deeper into debt-deflation and perma-slump. Such a strategy must slowly eat away at Italian and Spanish society, undercutting the whole purpose of the EU Project. It would ultimately risk trapping them in a debt spiral as well, leading to colossal losses for Germany in the end.

We can already see what's happening to the society of the Greek liars. The two main political parties are draining popular support as Greek society whines at the withdrawal of the euroteet. As government seeks to cut the incomes of the lower paid, Greek society really is starting to seize up.

At a guess, Spanish society will go down before Italy's. Spanish local government is riddled with debt, and several places have already said they cannot afford to keep some basic local services running. (Don't forget Portugal's finances are probably just as rotten underneath.)

Italians are probably more inured to corruption and incompetence, so there is likely to be more acceptance there, despite the efforts of the Northern League.

With its usual arrogance, France will expect the IMF and (mainly) the eurozone to take on the burden of French banks  with too much southern European debt. Let's see what the Finns and the Slovaks make of that.