The Modest Proposal Redux (a new version for the turbulent 2011)

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.