Heavy industry centres are typified by large, networked, powerful corporations. To cover their overheads these entities must have large outputs and contain their labour costs. This means that local people (mostly wage earners) cannot consume all that the factories are producing. This is why powerhouse economies require a hinterland to generate the necessary demand for their surplus goods. If the exchange rate between the powerhouse economy and the hinterland is fixed, the hinterland will remain in permanent trade deficit

The differences between Greece and Ireland are instructive. Ireland had a tiny debt before 2008. Greece had a large one. The reason is simple: capital flow from the surplus countries was directed into the Greek state, which in turn passed it on to developers--those who built highways, 2004 Olympic sites, etc. In Ireland the same capital flow went directly into the banks, which then passed it on to the developers, bypassing the state. Thus, Irish public debt was tiny while private debt was gargantuan--the opposite case to that of Greece--but when the crisis hit, the result was the same: the Irish state took on the burden of private debt and collapsed. The Greek state just collapsed.

We must create a Europe that does not squander its blood and strength on internecine conflict, but forms a compact unity.