The only hope these countries have is to devalue their old currencies to a level that makes them competitive
This is what the Spanish prime minister, Jose Zapetero, declared in an interview with the Wall Street Journal as recently as Sept. 22: "I believe that the debt crisis affecting Spain, and the eurozone in general, has passed."

Or let's listen to Patrick Honohan, governor of the Central Bank of Ireland, who soberly informed the markets last week that surging yields on Irish government debt would soon be back to normal levels. Both men are deluding themselves -- and us. From time to time, events take a turn which is too grave, unsettling and unfathomable for politicians to cope with. They enter a state of denial. We are now living through one of those times.

The European Single Currency cannot be saved. Yet the euro elite are unable to bring themselves to acknowledge the magnitude of this disaster. They have convinced themselves that all is well. The pattern is familiar and the British experienced something very similar in the months leading up to Black Wednesday and the eviction of sterling from the Exchange Rate Mechanism in September 1992.

First, the markets smell blood. Then the shoring-up operation begins, and finance ministers start to make statements of confidence. Ingenious financial devices are conjured up to avert disaster and, inside state chanceries, secret talks begin, to make contingency plans in case the worst happens. Only after a long, expensive and excruciating battle comes the ignominious exit.

So last week's Irish humiliation -- which has brought with it the extinction of the country's economic sovereignty -- is no more than a desperately sad moment in a much bigger story. And though the exact date of the final euro implosion cannot be predicted, a number of points can already be made with certainty.

The euro elite is utterly ruthless. In its mission to save the euro, it is ready to throw tens of millions out of work and in the process destroy businesses, lives and whole economies. Consider the terrifying facts. The Irish economy has gone through recession and entered what economists call a depression. Its output contracted by an extraordinary 10 per cent last year, and may well do so again over the next 12 months.

In Spain, unemployment stands at 20 per cent, and youth unemployment a horrifying and tragic 40 per cent. The depths of misery lying behind these statistics cannot be exaggerated. A friend of mine who lives in the Spanish province of Andalusia tells me that some children in his village cannot go to school. This is because their parents cannot afford to buy them shoes. Effectively large parts of Europe are de-industrializing. In Greece, the economy may contract by 15 per cent over the next two years as a result of massive cuts in state spending.

For Greece and Ireland, there is an absurdly easy way back to economic growth: return to the drachma and the punt. Such a move would enable national currencies to fall back to levels where they can be internationally competitive -- which in the case of hapless Greece would be approximately one-third of where it stands today.

Assertions by the big bankers and Eurocrats that such a move is technically impossible are self-serving and false. It would of course be very messy in the short term, but there are many examples of countries pulling out of currency unions with no lasting ill-effect.

The peripheral eurozone nations are being prevented from taking this sensible move by a cynical alliance between the big banks and the Brussels elite. The banks cannot countenance any contraction of the eurozone because once Greece, Ireland, Portugal and Spain pull out, they will have no choice but to default on their debts.

Such a move would bankrupt almost all European banks. Between them these four countries have a combined sovereign debt of well over £1 trillion. A very large part of this debt is owned by the major European banks. The Bank of International Settlements estimates, for example, that French financial institutions have lent the equivalent of 37 per cent of total French GDP to these failing countries.

However there are also hugely powerful political considerations. The collapse of the euro project will come as a shattering blow from which the European project cannot recover. That is why key members of the Euro elite are so determined to use this moment to press forward with their plans for political and economic integration.

Last May, as the storm clouds gathered, Dominique Strauss-Kahn, the former French finance minister who is now managing director of the International Monetary Fund, told a gathering of bankers that "crisis is an opportunity," adding that there is now the chance to launch "a new global currency issued by a global central bank."

This mad vision lies behind the decision to build a vast new set of offices for the European Central Bank in Frankfurt, which is due for completion in 2014. It is virtually impossible for the eurozone to last in its present form until then. If it does, its survival will only come at the price of untold economic devastation.