The slow car crash of the euro currency zone continues to gather pace. The Swiss government recently added Ireland and Greece to a list of countries whose government bonds would not be accepted as security. Pause and consider how a first-world country finds itself in that position vis-à-vis one of its peers.
European leaders are still divided in their response to the euro crisis. A suggestion to create a competitive zone made up of core members, but open to other EU countries, quickly collapsed under criticism. The tugging between Germany and France, seeking a closer economic and political union, is ensuring that a solution cannot make it onto the agenda.
Ostracism has become the economic policy of the EU.
To put this in perspective, lets go back to the founding of Haiti. A French colony, it won its independence in a land war, but soon found itself surrounded by the French navy and forced to come to crippling terms. Eighty years after independence, Haiti finally paid it off, the original debt valued today at more than US$20 billion (Dh73.4bn). Its freedom changed the status of its people from indentured labourers to indentured debtors, something it has never recovered from.
Today, David McWilliams, the Irish economist, has calculated that 80 per cent of Ireland's income tax take for last year would be required just to fund debt interest if, as expected, the country's new coalition government dumps (yet) more billions into its already bankrupt financial institutions.
Ireland's new government has effectively jettisoned its massively endorsed election manifestos and signed up to the historically unpopular outgoing government's economic plan, one written by the IMF and EU that underwrites the liabilities of lethally exposed French and German banks.
A recent euro conference by national leaders drafted a press release that gave Ireland a new gloss on mostly old decisions, bunkum to bring back home and bray stability and recovery in our time.
Portugal dipped its feet in the bond market by raising €1bn (Dh5.2bn) on March 9 for just under 6 per cent on two-year money. That's nearly twice what it paid in similar circumstances only last September. There is a suspicion that the European Central Bank (ECB) was involved in the success of this issue, suggesting that Portugal will become, like Greece and Ireland already are, fully dependent on the ECB for funding its deficit spending.
Portugal's singular advantage compared with its fellow PIIGS (Portugal, Ireland, Italy, Greece, Spain) is that its short-term borrowing requirements are manageable, which means a sensible restructuring deal is still within its control, one that - unlike Greece and Ireland - doesn't threaten to turn it into another Haiti.
Spain is reacting angrily to another downgrade by Moody's, which will increase the cost of servicing its debt. This will probably not be the last one and all eyes will be resting on Portugal and Italy in its wake.
Economics is not at the top of Italy's to-do list, being in the midst of a bizarre Shakespearian-style drama involving the prime minister, Silvio Berlusconi. The markets are much more concerned about what happens should the government fall. As a result, money has been flowing out of Italy to higher ground: the alpine mountain deposit boxes of Switzerland.
Moody's has just downgraded Greek debt, making it the riskiest in the EU. Coupled with more than €300bn of national debt and a budget deficit weighing in at 12.7 per cent, it is the odd one out among PIIGS.
Novel solutions to all these problems include one from a German politician, who suggested to howls of fury that the Greeks could sell or collateralise some of its uninhabited islands. A national meeting of estate agents in Ireland suggested turning some of the ghost estates into cemeteries, or just tearing them down at a time when homelessness is at an all-time high. I wish I was making this up.
The way forward is obvious. Bond holders who took risks should now take their losses.
Newfoundland was the last country to go bankrupt; the solution was to merge it into the dominion of Canada in 1949. So what is the future for the peripheral countries of Europe while its politicians fiddle and the Treaty of Rome burns?
David Daly is the chief financial officer of the Sifico Group.