Maeve Dineen: We must avoid fallout as Stark reality bites eurozone
IT WILL be another tense day on the markets following the extraordinary resignation of ECB governing council member Jurgen Stark late on Friday.
Mr Stark's decision to resign just months after fellow German Axel Weber quit as head of the Bundesbank highlights German dislike of the ECB's purchases of government debt, especially since they were broadened last month to include Italian and Spanish bonds.
Germany is now close to chaos. It would be similar to a situation here where Patrick Honohan and his successor quit because they disagreed with ECB and government policy and the coalition faced a revolt in the Dail as conservative members of Fine Gael refused point blank to back Enda Kenny's economic policy.
This is what is happening in Europe's biggest economy.
The euro could survive happily without Greece, Portugal and Ireland. It could even survive without Italy, Spain or possibly France.
The only country that is essential to the euro is Germany and right now Germany is finding the burden too heavy and too confusing to make a good fist of it.
The immediate market reaction to Stark's departure for "personal reasons" was swift and devastating -- the euro dropped to a six-month low against the dollar in the final hours of trading.
The currency is unlikely to be helped today by stories on the news wires reporting that the Germans are preparing a Plan B to help their banks in the event that Greece is allowed to fail -- an eventuality which insurance costs now imply to be a 92pc likelihood. Rumours saying that France's three biggest banks are also set for downgrades this week will hardly help settle nerves.
Ten years ago, when the two planes crashed into the World Trade Centre, we all knew the world had changed, but we struggled to understand how.
In retrospect, one of the consequences has been the realisation that the world was far more fragile than we had imagined.
The world's only super power was shown to be vulnerable in ways that we had simply not grasped.
The removal of the same country's triple A rating last month was just another reminder that the US was in trouble.
The limits of western military power were obvious to all.
The limits of western financial power are now also on display for everybody else to see.
It is certainly impossible to think of a time when either the US or Europe has been in more disarray.
As ever, when it comes to world affairs, Ireland must stand on the sidelines and quietly hope for the best as other countries get swept up in the maelstrom.
I don't think a solution will be found to the problems in Greece.
If my instincts (and the instincts of others such as Canadian Finance Minister Jim Flaherty) are correct, then Greece is about to be forced out of the euro.
The mechanism is hard to comprehend but it is almost irrelevant. What is important is what it would mean for us here in Ireland.
If Greece is forced out, we could need much more than two diplomats from the Department of Foreign Affairs assigned to the Department of Finance in the months ahead if we are to fight our corner in Europe.
It will require every sinew of the Government's muscle to save us from a similar fate.
Stark's resignation is neither the beginning nor the end of a long process but it moves the game on towards some sort of conclusion.
Greek and German intransigence means that the rest of the world has been left wondering who runs Europe.
I believe we will soon know the answer. The challenge for Ireland will be not to get caught up the crossfire.