Montreal, Canada

The single European currency is once again under attack this month after hitting a high of 1.428 earlier this fall vis-à-vis the American dollar. The EUR is down 4.9% from its best level this year as it resumes a decline marked by a seemingly never-ending sea of debt on its periphery.

Ireland is now in the hands of the European Financial Stability Fund (EFSF) and the International Monetary Fund (IMF). Though undisclosed at this time, the bailout should cover Ireland’s defunct banks, which essentially drained the government’s revenues to the point of fiscal exhaustion.

If there was ever a casino in banking, Ireland was the epitome as it borrowed heavily during the go-go property boom. Mind you, the American model comes close. So does the Icelandic banking system or what’s left of it.

Over the last six months, Ireland joins Greece on the bailout list with Portugal probably next on the firing line as speculators get closer for the final attack on her debt markets.

The real wildcard that can send global markets reeling is Spain; the Spanish economy should be able to avoid a bailout; but if the bond market vigilantes succeed in bringing her house down, the EUR will head to parity very quickly.

Spain is struggling with an ongoing property and construction bust. Her cajas, or mortgage banks, are the cancer in the banking system and continue to bleed.

Spain harbors one of the eurozone’s largest budget deficits at about 11.1% of GDP. Yet Spain is not Ireland, Greece or Portugal. The country has revenues and ranks as the world’s ninth largest economy.

Spain’s public debt as a percentage of GDP stands at 53% at the end of 2009; that compares to 79% for the eurozone as a whole. And despite heavy bond issuance this year, the Spanish economy has the lowest public debt-to-GDP ratios in the West.

It will be interesting to watch the bond market speculators and whether they turn on Spain in the final act of the Club Med tyranny that’s plagued Europe this year. Perhaps Bridgewater, the world’s biggest hedge fund, said it best earlier this month when it expressed grave concern over Spain’s finances: “Spain’s having the EUR as its currency is akin to its being on the gold standard.”

The message is clear: The EUR is deflationary for those nations seeking assistance and those countries already under austerity. The EUR crisis is far from over.