Ricky Gervais has a very funny sketch about how ludicrous the children’s rhyme, Humpty Dumpty, is. In particular, employing horses, who don’t even have thumbs let alone opposable ones, to put him back together again. Actually, it’s so good, I’m going to embed it here:

[youtube=http://uk.youtube.com/watch?v=hYytaZ06Hco]

Anyway, spurious introduction aside, apparently according to the Financial Times (thank you irisheconomy.ie), the euro is in danger of becoming our very own Humpty Dumpty, thanks in no small part to the risks associated with Ireland (as well as Spain and Greece). The video is well worth a watch for the spreads he shows emerging for the triumvirate of risky eurozone members. He refers also to intrade prices of 30% for one country pulling out of the eurozone in the near future, which he rightly points out are amazing odds for what would seem to be such an extreme event.

And if that were to happen, would anything policymakers try to do in response to fix the euro as a viable reserve currency be just the equivalent of sending all the King’s horses to mend a broken egg? Interesting times…

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One Comment

  1. Graham said on January 21, 2009 | Permalink

    This is really interesting stuff. I’ve been wondering myself whether the asymmetry between charter authority and monetary authority will not prove problematic for the Euro.

    Specifically, is it not possible that a major revamping of the banking sector of one country in the euro zone might have to be predicated on a (temporary) introduction of capital controls? If so, this could only happen by switching to a currency board arrangement – effectively dropping the euro.

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