Expulsion of Greece from euro would be catastrophic

And the other thing I warned you about at the beginning of the year was the problem in Euroland. The Irish are feeling the pain of reducing their debt, but the Greeks are on the verge of falling off the cliff. The social unrest occasioned by the government's austerity measures has, as predicted, been a factor in making Greek sovereign debt unpopular. There has even been talk of Greece's expulsion from the euro-fold. Greece's debt is 112 per cent of its GDP, and its budget deficit being one-eighth of GDP. Only Italy is a bigger debtor in terms of percentage of GDP. Even Germany has a debt of some 70 per cent of GDP, with the UK having a debt of around two thirds of GDP.

But the politicians have swung into action. Various EC Commissioners have taken action to get the Greeks to report satisfactory statistics, and have approved a modified budgetary plan. A united front is being presented to the world.

That is a relief. The expulsion of Greece from the euro would have been catastrophic for Greece, for the euro itself, for the rest of euroland, and for the rest of the world. This one is much, much bigger than the EMI, and definitely too big to fail.

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