Who's next? First Greece went bust. Now Ireland is getting a bailout from the European Union and the International Monetary Fund.
Now we will hear plenty of soothing words about how contagion has been stopped, the euro area has been put on a firmer footing, and the single currency saved. There will be a lot of grand rhetoric about the importance of the European project. Stern condemnations of the speculators will ring out across the continent.
Don't listen to a word of it. The euro has turned into a bankruptcy machine. Once the markets have finished with Ireland, they will simply move on to Portugal and Spain, and after that to Italy and France.
There is a domino effect at work, and, with each rescue, the fault lines within the euro grow wider and wider. This process isn't going to stop until the euro is taken apart.
The Irish crisis is far more serious for the euro than the Greek one. The only thing that can rescue the former Celtic Tiger now is a clear and straightforward commitment from the rest of the euro-area nations to salvage the country's economy. No doubt that will be forthcoming. Tens of billions of euros will be thrown at shoring up confidence in Ireland's finances.
But it is hard for the single currency's supporters to explain why it has come to this. The Greeks fiddled their way into the euro. They should never have been allowed on board.
And once inside, they should have been told to reform fast or get out again.
No one can say that about the Irish. Ireland had one of the most successful economies in the world over the last two decades. Its government was never profligate. When the crisis hit, it didn't bury its head in the sand the way the Greeks did. It took every austerity measure imaginable to try and fix its problems by itself - and without calling on outside assistance.
In short, the problem wasn't Ireland. It was the euro. The logic of that is inescapable. If it is the single currency that is at the root of the crisis, it won't stop here.
Where next? Portugal, most obviously.
The country had a deficit of 9.3 per cent of gross domestic product in 2009, the highest in the euro region after Ireland, Greece and Spain. The government aims to narrow that to 7.3 per cent this year, but whether that is achievable is doubtful. Bond yields suggest many investors are sceptical. In a Bloomberg poll last week, 38 per cent of global investors said Portugal was "likely" to default.
And after that? Why imagine that Spain is safe? Its budget deficit is expected to be 9.3 per cent this year, the second highest in the euro area. With a stagnant economy, it is going to be hard to make big reductions in that.
On the same logic, why not target Italy? It has remained under the radar, mostly because it has managed to avoid running up big budget deficits, at least compared with some of its Mediterranean neighbours. But it has a huge stock of debt, a legacy of past overspending. And its economy has been in terrible shape ever since it joined the euro.
What about France? True, it has a stronger economy than many of the peripheral euro-area nations. And yet as the protests over a very modest reform to the pension system last month made vividly clear, no other European nation remains as wedded to an outdated, expensive social system as the French. Even the Greeks showed more willingness to change. It would be wrong to assume France can stay out of the spotlight forever.
"Portugal faces various structural deficiencies," Morgan Stanley said in a note to investors last week, looking at which country would need a bailout next. "In Greece, the key issue is fiscal indiscipline, in Spain a credit-fuelled housing boom-turned-bust, similarly in Ireland but coupled with an outsized banking sector."
In each country, it will be a different trigger that causes a collapse in financial confidence. The root cause is the same, though. When the euro was launched, it was a big bet that sharing the same currency would make a group of very different economies converge, and so allow the European Central Bank to operate a single monetary policy for all of them.
An interesting theory, but wrong. The economies are just too different to allow a single central bank to manage all of them. Interest rates are always wrong everywhere. How that expresses itself varies. In Greece, it was a fiscal crisis. In Ireland, a banking collapse. In Spain, a construction bubble that burst. In Germany, a massive trade surplus. But, like a river looking for the sea, it always comes out somewhere.
This crisis will keep moving from country to country. The only permanent fix is splitting up the euro into more manageable currency areas. Until the euro-areas leaders recognise that simple truth, every bailout they come up with is only going to shift the attacks elsewhere.
- BLOOMBERGBy Matthew Lynn