With Italy and Spain showing signs of being embroiled in the debt crisis, the EU could engineer its own collapse by trying to secure more than 1 trillion euros ($1.3 trillion) to bail them out, says MEP Nigel Farage.
“You get to a point where there is no more bailout money and where [the] euro in its current form would cease to exist,” Farage said. “I don’t know whether it will happen in the next few weeks, but it remains a real possibility.” Italy, which is the third-largest economy that uses the euro currency, has started plunging in the same direction as Greece and Ireland did before the two received a total of 195 billion euros ($253 billion) in bailout money. Showing signs of investor distrust, both Italy’s and Spain’s interest rates on bonds edged to a euro-lifetime high on Tuesday. Portugal’s fiscal position has also been called into question.However, a bailout may not be the end of the domino problem that is plaguing the EU economy, Farage said. “Let’s say that the contagion does not go any further than Portugal, let’s say the bailout funds are not exhausted, that isn’t the end of the problem,” Farage said. “Because what you’ve now got are countries like Greece, Ireland, and potentially Portugal who are trapped inside an economic prison that is called the euro, for which they are not suited. And the bailout that Ireland saw last week is not the end of the matter. I suspect that things in Ireland economically will be much worse in two years time that they are now.” Farage also warned that now that the bailed out countries have traded political and economic autonomy for financial survival, they risk the emergence of extremist political groups. “What you need in a recession, what you need in a global economy which we are not living in is flexibility and adaptability,” Farage said. “And when you join the euro, you give away control over interest rates. And now that they have been bailed out, they have given away the ability to decide their own budgets. Greece and Ireland have now become protectorates of the EU. They have lost their democracy. They have lost their self-government. And I do feel that extreme political groups will now be on the rise.”