By: Paul Joseph Watson
Tuesday, May 18, 2010
Former Bank of England policy maker says collapse of single currency unstoppable
Despite EU finance ministers trying to put on a brave face, confidence in the euro and the entire EU project as a whole continues to crumble, as former Bank of England policy maker David Blanchflower warns that the entire region could break up and that another euro bailout is inevitable.
Speaking with Bloomberg News, Blanchflower said that another European bailout was coming after the $1 trillion dollar package passed last week did little to reassure markets that the situation was under control.
Blanchflower said that there were “major cracks” in the EU, and when asked whether or not the common currency was dead and if the region would break up, Blanchflower said, “I didn’t think it was going to but I’m more concerned and worried now that it may well do so.”
The former Bank of England official also predicted that the euro would sink to parity with the U.S. dollar.
“It looks to me like down for quite a while to come so parity may not be crazy….I think now we’re in a position where it may be unstoppable,” said Blanchflower.
The euro rebounded a little yesterday after Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill characterized as “ridiculous” suggestions that the euro area would disintegrate as a monetary union.
“This is 60 years of history in the making, so the idea that the euro simply falls apart at first test of its credibility, I think it highly unlikely,” O’Neill said. “It might well be in 20 years time it doesn’t exist but the idea that it’s not going to exist in the next year because the market is worried about Spain and Portugal’s funding requirements is ridiculous.”
However, according to John McCarthy, director of currency trading at ING Financial Markets LLC, the euro has “breakup written all over it”.
“It is possible they cobble something together and everybody works hard, but as a betting man I’m betting it’s not going to survive in its current form,” he said.
As we have highlighted, EU bureaucrats are unlikely to let the euro collapse because such a crisis would discredit the justification for a move towards a global currency bossed by a global central bank, as IMF chief Dominique Strauss-Kahn outlined last week during a speech in Zurich.
If the euro were to go under, it would expose the inherent weakness of continental monetary unions and all but derail the wider agenda for a one world currency.
Watch the interview with Blanchflower below.