Beware of Greeks bearing pigs!

The US economy is expanding, the Chinese economy is booming and European economies are just about pulling themselves out of the mire. Even the UK's managing some tentative growth.

It's just a shame about the pigs!

Pigs of course are Portugal, Italy, Greece and Spain. Some have started talking about Piigs (to include the Irish) but in the interests of a decent acronym, we'll leave that to one side for now.

The problem with this particular Greek tragedy is that the gods can't afford to look down from Olympus (aka Brussels) and remain loftily impartial as the mortals battle it out for their amusement. This isn't just about retsina mountains or olive oil lakes any more. We're potentially talking about the fate of the Eurozone here and beyond that, the future of the entire Single Europe Project - and the retirement plans of so many political leaders!

If Greece has to pull out of the Eurozone, it would be a massive blow to The Project. But would other Eurozone nations be ready to bail out Greece? Germany probably would and France could be persuaded, but no-one came rushing to bail out the Irish so that idea might not go down so well over there. And where does it stop? Do the Eurozone nations keep propping one another up?

For the UK, the danger of the current crisis is one of association. The UK is not part of the Eurozone - the decison to drag heels on entry is one that even the sternest of Gordon Brown's critics appears ready to give him points for now! (That non-membership of course is not preventing Brown of all people from having the sheer gall to lecture Greece on the need for extreme fiscal austerity!).

But the real danger is the perception of the UK's fellow travellers in this latest crisis. Already we've had  Simon Johnson, a former chief economist at the IMF, declaring that the UK should be seen in the same category as Greece and Spain - borderline basket-case, not a good descriptor for the international markets to take a shine to...

The crisis is now becoming a political football in the UK as well with Tory leader David Cameron warning that the UK is heading down a Greecian path.  No wonder then that Peter Mandelson is hitting back: "It is talking Britain down when David Cameron compares Britain -ludiocrously in everyone's eyes -to Greece. That is disgraceful, it is irresponsible, it is also unpatriotic."

Of course, it's been cynically amusing however to watch m'Lord Mandelson's liguistic torture as he is forced to concede, arch-Europhile, he - that being outside the Eurozone has been pretty useful of late... (That said, he quickly follows up with the proviso that this "doesn't necessarily mean that being out of the Eurozone will always play to Britain's economic advantage".

But there's a horrible air of political familiarity about all of this. Gordon Brown is dutifully off to have his picture taken at the inevitable  'tough, but resolute' photo-shoot with other European leaders this week. Communiques will be issued. Crisis talks will be engaged in. Deals will be done. Back home, the Tories will criticise from the comfort zone of Westminster, grateful that this hasn't happened on their watch and wondering how to make hay from the crisis without being seen to gloat.

What we must all fervently hope is that the reality of the crisis is faced up to. The harsh reality is that a good many economic misgivings were too airily swept under the plush in Brussels and far too many blind eyes turned in order to pursue the shamelessly political aim of expanding the Eurozone. It was never a question of whether such a crisis would arise, just which little piggy it would be whose house of straw was blown down first?

The European Union's Stability and Growth Pact was designed to enforce fiscal discipline, sets debt and deficit ceilings for member states. It gives Brussels the right to warn and sanction countries who violate these limits. You'd think now might be the time to see that coming into force and showing its steel.  Instead we've got dither, indecision and doubt. No wonder then that economists at UniCredit have described the pact as a "spectacular failure" and called for it to be replaced with something "tougher and more enforceable".  

If such advice is not heeded, we're not talking about little piggies running all the way home to the IMF ; we'll all be bacon!