I reckon that there is about as much chance of the German parliament and courts along with a voting and tax-paying public agreeing to 'Eurobonds' without some 'unpalatable' political adjustments for the rest of the Eurozone club as there is of an Irish referendum passing to allow for limits on budget deficits written into Bunreacht na hEireann with de-facto Franco-German vetos on Irish corporate tax exceptionalism. This has been the weirdest summer here in Europe in a long time and the weather has been just as weird.
I am sure many agree with Karl Whelan when he says that, even in the unlikely event they could be implemented at all, or in time, the Merkozy Summit proposals would probably worsen the crisis they are intended to resolve. However, his assessment of options to deal with the crisis seems mistaken in a way that will limit debate.He implies that one fiscal solution, new financing by means of Eurobonds, will require some form of 'fiscal union' that he deems will not be operational now or any time soon. In a Modest Proposal(http://varoufakis.files.wordpress.com/2011/04/ceb1-modest-proposal-2-2-6th-april-20111.pdf)Yanis Varoufakis and Stuart Holland propose a solution to the crisis involving Eurobonds issued and guaranteed exclusively by the ECB, without any fiscal transfers, with no taxpayer-fundedbond buy-backs and without changing existing Treaties. No fiscal union, no loss of national sovereignty.The authors recognise that the crisis is not simply about sovereign debt it is also about a banking sector crisis and an under-investment crisis. So they have formulated a self-consistent strategy to deal with debt management, bank sector cleansing and economic growth.Their proposal should be central to the debate.
Post a Comment