Europe's nuclear brinkmanship with Greece is a lethal game

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The chief danger is not for Greece. It is for the rest of the eurozone. If the German political establishment is unwise enough to force Greece out of EMU on the assumption that the country is a special case, it will be disabused of this illusion very quickly.

Total debt levels are 100pc of GDP higher in Portugal, and the country has roughly the same current account deficit. The only difference is that Portugal began its austerity death cure later and has not yet had time to enter into the full vortex of debt-deflation and collapse. Give it a few more months.

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Global investors will not hang around to see how the experiment unfolds. Nor will Spanish and Italian citizens. Deposit flight will be instant and massive. Indeed, it is already happening, judging from the Bundesbank's latest Target2 claims on Club Med peers. This reached €644bn in April, or a quarter of German GDP.

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There is no "clean" way to end EMU. But there are certainly degrees of havoc. The least destructive is for the German core to withdraw in an orderly way, leaving EMU to the Latin bloc with euro contacts in tact. The worst possible way to do end this misadventure is to light the fuse in Greece and set off a chain-reaction of uncontrolled EMU exits and sovereign defaults...