Here, in a chart, is why Britain can’t afford to be complacent about the plight of Portugal, Ireland, Italy, Greece and Spain. UK banks are exposed to these countries to the tune of 16 per cent of gross domestic product, according to this chart from Stephen Jen of BlueGold Capital Management (the figures themselves are Bank for International Settlement numbers).

By my reckoning that’s just under £250bn of exposure, so if these economies topple, we can’t afford to smirk and be smug about the fact that we avoided joining the euro. We would be engulfed in a nasty, nasty financial crisis of our own.

Look, too, at Switzerland: it faces a 21pc of GDP exposure to these struggling nations. It is an important point ahead of tomorrow’s crunch European Council meeting tomorrow, at which leaders are expected to agree on some sort of bail-out package. At the moment, it looks as if the eurozone members (mainly France and Germany) will provide cash for a “firewall” bail-out designed to prevent these countries from toppling, but there are some whispers that Britain may have to make a contribution. These figures might help explain why. But in that case, one would also expect Switzerland to get involved, no?

In fact, the more one considers it, the more barmy it is that the eurozone ministers have pretty much vowed not to allow the IMF in for a bail-out. This is what the UK has been advising behind the scenes, but the euro ministers realise that this would be seen as an admission of the project’s failure. I also like Stephanie Flanders’ point that, of course, Nicolas Sarkozy is also determined not to let his future presidential opponent IMF chief Dominique Strauss Kahn swoop in and “save the euro”.

Anyway, there’ll be much more of this in tomorrow’s paper, where Ambrose Evans-Pritchard will explain all, and I have a run-down of the issues in my 0p-ed. So stay tuned.

PS Yes, I know we’re not supposed to call them PIIGS but the acronym is just too irresistible. However, one decent alternative I heard today is Club O’Med. Kudos to whoever dreamt that one up.

source HERE

Posted by Mr Thx Thursday, February 11, 2010


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Sekapur Sirih Seulas Pinang

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