European meltdown

The world’s local bank has some interesting thoughts on the Euro.

HSBC has become the first major bank to warn that Europe's monetary union is working so badly that some countries may actually "benefit" from ditching the euro.

Being a London based bank it’s probably no more than Ultra Liberal Anglo Saxons attacking our Collectivist European Future.

It said the euro had pushed Germany to the brink of deflationary spiral, while causing a "dramatic boom and bust" in Holland. At the same time, Italy was now trapped in slump with a "truly appalling export performance" and exorbitant unit labour costs.

So overall not a totally positive picture then?

HSBC said Rome might benefit from switching its existing national debt (now 107pc of GDP) from euros to a weaker ''new lira'' - even if this amounted to a default. "The thing about sovereign debt is that the sovereign can do just about anything it likes on its domestic debt because it enacts the law that govern those securities," it said.

This is more overt than anything else said so far, with most commentators sure that dropping the Euro would cause debt service problems. I wonder how many Liberal Democrats will change their bank accounts?