Now completely back into the swing of things after what seemed like  an unusually long absence over the summer, time that was presumably taken for a good long break from focusing on the world’s financial market woes, Ambrose Evans Pritchard at the U.K. Telegraph files this comprehensive report on why Europe is about to go up in flames.

First we learn from planted leaks that Germany is activating “Plan B”, telling banks and insurance companies to prepare for 50pc haircuts on Greek debt; then that Germany is “studying” options that include Greece’s return to the drachma.

German finance minister Wolfgang Schauble chose to do this at a moment when the global economy is already flirting with double-dip recession, bank shares are crashing, and credit strains are testing Lehman levels. The recklessness is breath-taking.

If it is a pressure tactic to force Greece to submit to EU-IMF demands of yet further austerity, it may instead bring mutual assured destruction.
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Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been “Unconditional Capitulation”, and “Terrorization of Greeks”, and even “Fourth Reich”.

As one prone to hyperbole, you might think that Ambrose is just doing what he does best (something that, apparently, boosts the Telegraph’s readership), but, maybe not this time.

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