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Tuesday, 8 November 2011

Between a Rock and a Hard Place

In April 2003 22-year-old Aron Lee Ralston was hiking alone in the wilds of Utah when a boulder over which he was climbing became dislodged, crushing his right forearm and pinning it against the canyon wall.

His story is told in harrowing detail in the film 127 Hours. I shall spare some of that detail but, in summary, Ralston spent five days eking out his just over half pint of water while vainly trying to free his arm from under the 800lb rock. Finally he broke the two main bones of his forearm and then amputated the limb using a blunt two inch knife in an hour long operation. He survived and has gone on to become a public speaker.

I wonder whether he is getting many bookings in Greece or Italy where they face a similar dilemma.

They too have a choice between making a courageous decision entailing unimaginable pain, trauma and danger or of resigning themselves to the inevitability of a slow and miserable death.

Such is the judgement to be made by the Greek and Italian peoples as they now think the hitherto unthinkable – leaving the euro.

We eurosceptics should not be so blinded by our own schadenfreude as to ignore the enormous consequences of exiting the single currency. UBS, for example, estimates that a weak euro country which left would incur a cost of about 9,500 and 11,500 euros per person in the first year – that is about 40% to 50% of GDP – and 3,000 to 4,000 euros per person in following years.

Which is bad.

But the alternative is to slowly strangle their economy to death with the twin ligatures of the wrong exchange rate and the wrong interest rate. The country will die, losing its young people, save the few who stay to minister to rich North Europeans in their holiday villas.

They must ask themselves: what would Ralston have done?

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