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The EU is defenceless against an economic crisis

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The gods of the global economic cycle have conspired to help Boris Johnson. As a matter of raw political brinkmanship, worse is better. As Boris delivers his "take-it-or-leave-it" proposal to Brussels, the eurozone has its back against the wall. Germany is in recession. Europe's industrial slump is deepening. The European Central Bank is a broken and exhausted institution.

The critical twist this week is the collapse of the ISM manufacturing index in the US. New export orders in September fell to the lowest reading since March 2009. Donald Trump's trade wars are catching up with him.

Boris Johnson is desperate to "get Brexit done."Credit:Getty Images

The US Fed has made matters worse by running down its QE balance sheet too far and starving the world's financial system of dollar liquidity.

Today's equity cascade on Wall Street and European bourses had a very nasty feel. Crucial lines of technical support are crumbling. Michael Wilson, Morgan Stanley's stock guru, thinks the failed share launch of WeWork may have been the bell at the top of the market.

The eurozone is paralysed. The Stability Pact and the apparatus of fiscal contraction - written into treaty structures - render it incapable of generating its own domestic demand. It relies on Anglo-Saxon and Chinese demand to stay afloat. Neither of these two blocs are co-operating.

The question that EU leaders must ask themselves as they try to understand the tangled complexities of Boris's "two borders" plan is obvious: can they risk the unforced error - indeed chosen error - of a no-deal Brexit on top of everything........

© The Age