Followers of my blog will be aware that I am no great fan of the European experiment (or at least the way it is being sold to the European electorate). The euro was fatally flawed from birth and we should take care never to forget this. The rather ponderous title of this blog has been taken from a new book written by no less an authority than Nobel Laurent Joseph Stiglitz. The Eurozone operating with a fixed exchange rate and single interest rates causes enormous imbalances that are very difficult to correct.

Quite simply, Germany is massively outcompeting its European cousins and now thanks in part to a relatively cheap euro is amassing the largest current account surplus in the world (even ahead of China and Japan). Germany accounts for around 75% of the Eurozone current account surplus which is running at a massive 8% of GDP. Externally, this can be managed but within the single currency it is a major problem as Greece and Spain have discovered.