Doomsday scenario of Greece deciding to leave the single currency has spooked investors, who are demanding a high price for holding risky Greek debt. Government debt is expected to reach 80 per cent of GDP this year. IMF is eager to march into the euro zone and intervene.

"We are there to help. I have a mission on the ground to provide technical advice requested by the Greek government. And if we're asked to intervene, we will. I understand that the Europeans don't want this for the moment”, said Dominique Strauss-Kahn, the Managing Director of the IMF.

The gap between the interest rates on rock-solid German bonds and Greek bonds has widened sharply. "The measures taken last Tuesday – tax rises, the freezing of wages in the public sector, and the pension reform – are steps in the right direction", said Jean-Claude Trichet, European Central Bank president.

Determination to make the single currency work has been driven by two outwardly contradictory forces. On the one hand it is felt that the financial crisis has been a failure of the Anglo-Saxon model, and hence a shot in the arm for European social democracy while on the other hand, there is a sense that economic and political power is shifting inexorably to Asia.

Countries such as Spain and Greece are symbolic of the problem. They lack both the physical and human infrastructure needed to make them more competitive. This is a problem not just for now but for the future, as the ageing generation presents Europe with a steady decline in its working-age population.