The UK is fortunate that Tony Blair didn’t get his way on abolishing the pound.

Why? Morgan Kelly, Professor of Economics at University College Dublin, believes that Ireland — which did join the euro — is “no longer a sovereign nation in any meaningful sense of that term.”

Writing in the Irish Times, he says: “By next year Ireland will have run out of cash, and the terms of a formal bailout will have to be agreed. Our bill will be totted up and presented to us, along with terms for repayment. On these terms hangs our future as a nation. … Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.”

The country is thought to be close to losing its access to international debt markets. Jens Peter Soerensen, Chief Analyst at Danske Bank, a primary dealer in Irish government bonds, has said that “It’s close to a buyers’ strike at this point.”

Open Europe reports that EU Economic and Monetary Affairs Commissioner Olli Rehn will arrive in Dublin later today to hold meetings with Irish Finance Minister Brian Lenihan and the opposition parties to discuss the government’s proposed budget cuts for 2011.

Ireland’s already eye-watering austerity measures have seen the loss of 20% of its economy, while its banking sector remains mired in bad debt and inadequate capital resources.

Membership of the euro currency zone is hampering government efforts to deal with the crisis by preventing a devaluation, which would make exports more competitive in international markets.

A classic Irving Fisher debt-deflationary spiral is underway with tragic consequences for the Emerald Isle.

The UK’s Coalition Government has already signed up to a triple EU regulatory regime for the City of London. It would do well to hang onto as much autonomy as it can. If leaving the EU is not on the agenda, a refusal to be bossed about by Brussels is the next best option.

This article first appeared in our sister publication Devon & Cornwall Online.

A dead-cat bounce appears to be underway in the US. Under the heading, “Refinancing avalanche threatens European banks,” Open Europe is reporting a €2trillion black hole in European banks. Nothing is going right on either side of the Atlantic.

The think tank says, “FT [Financial Times] Deutschland reports that there is a ‘€2,000 billion problem in European banks’. It notes that ‘the real stress test still has to come. Banks must refinance billions. A refinancing avalanche is coming their way’.

As for America, the Telegraph’s Jeremy Warner writes on his blog: “… the IMF in its ‘selected issue paper’ on the US economy calculates that ‘closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.’ As Professor Kotlikoff notes, the entire Federal tax base amounts to 14.7 per cent of GDP, so to close the gap from a revenue perspective would require the authorities to double the rate of taxation in the US.”

There are also reports that the Fed has begun a second round of Quantitative Easing (QE, or printing money in the vernacular). Labelled QE2 or QE Lite, it’s thought to be preface a plumping up the Fed’s balance sheet from $1.2trillion to around $5tr in the near term.

Both the US and the eurozone appear to have intractable problems going into the medium term. The notorious “double-dip” seems ever more likely, but what chance of a new Great Depression?

When the eurozone goes, it will go suddenly. One moment it will be there, and then it will have vanished into the historical annals of catastrophic human vanity projects that disappeared.

The worst case scenario is that a worldwide contagion begins on the European continent. August 1914 will have its 21st-century anniversary in four years. And the grandiose political vanity of Continental politicians will be again at the heart of it.

This sunny spring could represent a kind of Edwardian glow before the chancellory lights go out once more across Europe.

Read the rest of this piece on our sister site: Syntagma

The International Monetary Fund, as predicted, is now forecasting that British gross domestic product will contract 2.8pc this year, worse than the U.S., the eurozone and Japan.

Last year we reported here on the first use of the “T” word (trillion) for losses across the banking sector. Now we’re into the “2T” word, a graphic indication of how much conditions are deteriorating around the globe.

The IMF expects the US economy to contract 1.6 percent; Japan to shrink 2.6 percent and the eurozone to decline 2 percent. Overall, the IMF expects the global economy to expand 0.5 percent, its weakest showing since the Second World War.

Economists at the IMF also estimated that bank losses may reach $2.2 trillion, almost twice the $1.4 trillion the organization predicted in October.

It warned that, “unless stronger financial strains and uncertainties are forcefully addressed, the pernicious feedback loop between real activity and financial markets will intensify, leading to even more toxic effects on global growth.”

In Britain, the bank bail-out is already projected to take national debt to 8 percent of GDP, and today the Institute Fiscal Studies warned that national debt levels are unlikely to return to the pre-crisis levels for more than 20 years.