As the euro crisis will enter its final stages in 2011, and the debate on how to end it will heat up, I thought it important to update the Modest Proposal, in preparation for the debates to come. Click here for a copy.
The main difference from the last version concerns the first step: Rather than suggesting a tripartite agreement, following a meeting between representatives of indebted states, insolvent banks and the ECB, the Modest Proposal now suggests something simpler: The ECB makes continuing support of the banks conditional on them accepting an immediate haircut on the member-states’ debt. No negotiations, no delays, no ifs and no buts. Another difference is extra clarity regarding the role of the EIB and, lastly, a crispier (I hope) preamble. Let 2011 see a rational solution implemented, along these lines or perhaps alternative lines that someone else may sketch. Anything but the current madness will do.