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  George Soros has been looking at the new European Central bank bond deal to bail out the debtor countries and it makes worrying reading. Apologies if it a bit technical but here are some extracts:
  
  (from New York Review of Books)
  
  "Unfortunately, even unlimited intervention may not be sufficient to prevent the division of the euro area into creditor and debtor countries from becoming permanent. It will not eliminate the risk premiums, only narrow them and the conditionality imposed on the debtor countries by the EFSF is likely to push them into a deflationary trap. As a consequence, they will not be able to regain competitiveness until the pursuit of debt reduction through austerity is abandoned." ....."The line of least resistance leads not to the immediate breakup of the euro but to the indefinite extension of the crisis." .....
  
  "It will be a hierarchical system built on debt obligations instead of a voluntary association of equals. There will be two classes of states, creditors and debtors, and the creditors will be in charge. As the strongest creditor country, Germany will emerge as the hegemon. The class differentiation will become permanent because the debtor countries will have to pay significant risk premiums for access to capital and it will become impossible for them to catch up with the creditor countries." .....
  
  "Both human and financial resources will be attracted to the center and the periphery will become permanently depressed. Germany will even enjoy some relief from its demographic problems by the immigration of well-educated people from the Iberian Peninsula and Italy instead of less qualified Gastarbeiter from Turkey or Ukraine. But the periphery will be seething with resentment." .....
  
  "Prospect of a prolonged depression and permanent division into debtor and creditor nations is so dismal that it cannot be tolerated. What are the alternatives?"
  
  ....................
  
  That is serious stuff.
  
  To paraphrase this - the ECB bailout will just prolong the economic depression, not generate recovery. Debtor countries will just sink into more and more poverty with their talent moving to more prosperous regions. This is a recipe for a disaster social, economic and potential internal and external conflict.
  
  The UK really must redouble efforts to develop markets outside Europe, get out of the EU and try as far as possible to insulate us from the disaster happening over the channel. We must hope that common sense prevails and the Euro is broken up.

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