People often say to me: okay, what does economic history tell us about the future? What's the point of a skills set and a big bag of knowledge that doesn't help us divine what's likely to happen next?
I'll have a go. There's a health warning, though: don't invest any of your money based on what you read here. We live in strange and uncertain times. The level of turbulence we face is unprecedented since 1945. Just about anything could happen.
Start with this: the odds are higher than 50% that Greece will indeed fall out of the Euro. There are all sorts of risks involved. But an economy that has shrunk by 50 per cent over the last few years just can't take any more. Observers from Left and Right know that much the best thing would be for the Greeks to leave. Sure, that's no panacea. Greeks might lose all their savings - not that they're going to have any if we go on as we are. There might be a very sharp rise in inflation - though it's hard to see how the citizens of that country could be made much poorer than they're going to be anyway. A black market might develop if Greece's new currency isn't trusted as a true carrier of value.
But they're probably going to go anyway. Think that a democratic state can stand up to basically taking modern prosperity to pieces and taking living standards back to 1950s levels? Think that Greek public sector workers - nurses, teachers, doctors - who did absolutely nothing wrong whatsoever, are going to bear the pain that others have loaded on them? No? Then Greece has to leave the Euro.
What will happen then? The crisis won't be over. The doubts, the risks and the speculators will move on. To Portugal and Ireland. To Spain. And to Italy. There's no way that those countries will leave unless they are absolutely, absolutely forced to. And almost certainly not in 2012 or 2013. So it'll be a slow-motion agony, with the citizens of those countries forced to swallow cut after cut after cut (and tax rise after tax rise) with not much effect on markets that won't be impressed anyway.
Brits will suffer too. The Eurozone's economy will slow. British growth will be dragged down. If the Chancellor is as good as his word about paying off structural debt in this Parliament, he'll need to add to the £18bn or so extra cuts he said were required in the Autumn Statement. If there's no growth at all in the next two years, that's probably another £50bn in cuts. So £80bn plus £68bn equals £148bn - all of education and defence added together. And then some. Or more than the entire NHS budget. Now I know it doesn't work like that, partly because many spending reductions are already in train - and the latest news on the deficit is actually a tiny bit better than predicted. But it's a good indicator of the challenge before us.
It's gloomy. You didn't expect anything else, did you?
