In case you haven’t seen it yet, the “Europe on the Brink” article by Peter Boone and Simon Johnson is a must-read for anyone grappling to understand the Eurozone crisis (see here). Oversimplifying their argument a bit, they contend the feasible exit routes from the crisis involve either the extremes of decisive debt restructuring or a committed lender of last resort (something that they refer to more explosively as a “moral hazard regime”). Paul de Grauwe’s Irish Times piece from today makes the argument for a committed LOLR, but he cautions it is only conceivable with much greater central control over fiscal policy. I think Willem Buiter’s FT piece from earlier in the week can be read as saying the intermediate route combining a more modest LOLR function with private sector involvement is still most likely – and may succeed. Readers might also be interested in this more recent Citi Economics paper by Buiter and others urging more decisive LOLR action from the ECB.
The new Department for Public Expenditure and Reform is looking to fill this senior position. Details are here.
Kantoos is a German blogger who occasionally posts in English; he has a thoughtful response to an earlier piece by Ryan Avent here.
(I would add two comments. First, that when people talk about fiscal union they can mean many different things. And second, that we already have the politically noxious conditionality which Kantoos is worried about.)
A little bit more detail has emerged (via press interviews rather than detailed technical documents) about the Nama property price insurance scheme as it is currently proposed. The basic design was leaked to the press in early July, and was discussed in my earlier thread. The emerging details of the scheme as announced so far are not reassuring. The scheme has considerable potential to manipulate recorded property sales prices, to damage confidence in Irish property market openness, and to build up a hidden future cash flow liability for Irish taxpayers. The motivation given by Nama for implementing the scheme is not entirely convincing.
Eichengreen and his collaborators delve into the details of the Greek debt plan in this Bloomberg article.