Some say that the seemingly arcane economic policy debate doesn't matter. Across much of western Europe the political and media classes have long displayed a tendency to roll their eyes whenever anybody with even a smattering of economic insight has had the audacity to express his views.

For many people, ignorance of financial issues has been a badge of honour. Economics has been dismissed as a "trade". To hold well-researched views about commerce and asset markets is to risk being suspected of being an arriviste.

Such is the prejudice of those cosseted from economic reality, their minds dulled by generations of inherited wealth. Well, such minds created the euro and what a disaster it has been. And the greatest disaster might yet be to come.

Let what is now happening in Europe serve as a reminder, a 28million decibel wake-up call, that serious economic debate matters.

Attempts to dismiss or even suppress it, because it's "hard" or "boring", have very real human consequences. In the run-up to the eurozone's launch, there was almost no discussion of its technical flaws.

Those of us who tried to air such concerns were dismissed as "xenophobes" and "cranks". So we've ended up with a eurozone so replete with inherent contradictions that it threatens now to spark a financial meltdown across Europe and serious civil unrest.

Global financial markets are in a paralysis of fear and confusion. With politicians and policy-makers finally admitting that the jumped-up dismal scientists are correct, and that "Grexit" really could happen, investors in Europe and elsewhere are slashing their euro exposure.

During the first quarter of 2012, bolstered by German growth, and with eurocrats scoffing at those who said Greece might leave the zone, the single currency rose 3%. Since that indecisive election on May 6, though, and Athens' subsequent inability to form a government, fears of a fully blown default, and eurozone-wide contagion, have spooked global markets. On Friday, the euro fell below $1.25 to a 22-month low and is now down over 4% this month.

Traders are contemplating the financial turmoil if Greece leaves - to be followed by who knows what?

Equities, meanwhile, have gyrated on very low volumes. Institutional investors, clueless as to what will happen, have stockpiled cash. Having endured crisis after crisis since 2008, financial markets in general have volatility fatigue. With trading thin, investment isn't happening, compounding the broader growth stasis. That cranks up welfare payments, lowers tax income and makes European sovereign balance sheets look even worse.

On an axis of printed money, the government-bank negative feedback loop spins faster and faster. How long before the gyroscope finally topples, with investors dumping the euro altogether?

With "break-up" becoming ever more plausible, monetary union is showing structural cracks. Germany's 30-year bond yield last week dipped below 2% as the borrowing costs of embattled "peripheral" countries shot up. Investors are so desperate for a haven that they're now lending Berlin short-term money free.

A single currency union can be maintained if people don't worry about whether they're holding German, Spanish or Greek euros. Well, savers are worrying now. An "intra-euro bank-run" has been happening for months, with deposits heading for the Teutonic core. Mediterranean firms and households are petrified that their cash could be converted into devalued drachma or pesetas in a break-up. And what of all those mortgages, corporate loans and other commercial contracts?

Despite all this, European policy-makers languish in denial. Last week's "informal" European Union summit in Brussels focused on yet another "rescue scheme", this time using "project bonds" to be launched for a trial period in the middle of the year.

As policy responses go, though, "project bonds" are like attacking an inferno with a water pistol - and a water pistol squirting petrol. The only "private" investors willing to invest in such a scheme will be state-dependent commercial banks and heavily regulated pension funds ordered to do so by their political masters.

"Project bonds", of course, are designed to be a step towards the "euro bonds" being promoted by new French president François Hollande - a euphemism for Germany underwriting everyone else's debts. That would amount, in essence, to fiscal union. It seems to me pretty obvious that, for all the hopes being pinned on such an outcome, it simply isn't going to happen.

The tacit plan seems to be that Berlin will accept full-on European Central Bank debt monetisation in return for a German-directed fiscal union, with powers to raise taxes and make large-scale transfers between countries, while issuing joint eurobonds.

The trouble is that Greece is a democracy, Spain is a democracy. France, the world's fifth-largest economy and one of the most powerful countries on earth, is a democracy - and a pretty feisty one at that. Are all these countries, their electorates supplicant, their future politicians content, really going to subscribe to live under a system based on Berlin telling them how much they can borrow and spend? I don't think so.

The central problem, compounded by the eurozone's deep flaws, is that many of the region's banks are fundamentally insolvent. The only way to address that is to lance the boil and, while protecting depositors, let these rancid institutions go bust.