The thing about reading stuff like this is that you have to spend a lot of time seeking out the logical flaws, or the non sequiturs. And these are often cleverly hidden. I'm quite used to this because you see it a lot in the witterings of poker analysts attempting to justify playing in a certain way and denigrating (often equally valid) plays in another way.
Now, in the brief reading that I gave this piece last night (I fear that no Greek or Irish academic's analysis of the situation is going to be completely value-bias-free) I was at least relieved to see that the writer admitted that his solution would not happen. That saves a lot of trouble.
The solution seems to me to be a form of the "sovereign pooling of debt". This is a bit like the "gold out of lead" alchemy, and its real basis assumption is that the strength of Germany would "pull up" the weaker economies. Notwithstanding Germany's obvious reluctance to put in with such a scheme (or rather, the reluctance of its voters), the non-sequitur arrives here. By transferring 60% of the debt to a newly invented tranche, the writer says that
This will immediately reduce borrowing costs for the most exposed member states, attract investments from the Central Banks of surplus countries (e.g. China) and from sovereign wealth funds (e.g. Norwegian, Russian, Chinese),
. But is this necessarily so? It's a nice solution for Greece, but it doesn't address the fundamental problems. It also begins with the implicit assumption that the aim is how to save the eurozone, whereas this is not the aim of very player in this game, not by a long way. So, it's a solution that won't be implemented, and, if it was implemented, might not work, and it provides a solution that only some players in the game see as the main aim (which is a bit of the Grek value bias creeping in).
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Date: 2010-11-24 12:47 pm (UTC)Now, in the brief reading that I gave this piece last night (I fear that no Greek or Irish academic's analysis of the situation is going to be completely value-bias-free) I was at least relieved to see that the writer admitted that his solution would not happen. That saves a lot of trouble.
The solution seems to me to be a form of the "sovereign pooling of debt". This is a bit like the "gold out of lead" alchemy, and its real basis assumption is that the strength of Germany would "pull up" the weaker economies. Notwithstanding Germany's obvious reluctance to put in with such a scheme (or rather, the reluctance of its voters), the non-sequitur arrives here. By transferring 60% of the debt to a newly invented tranche, the writer says that .
But is this necessarily so? It's a nice solution for Greece, but it doesn't address the fundamental problems. It also begins with the implicit assumption that the aim is how to save the eurozone, whereas this is not the aim of very player in this game, not by a long way. So, it's a solution that won't be implemented, and, if it was implemented, might not work, and it provides a solution that only some players in the game see as the main aim (which is a bit of the Grek value bias creeping in).
PJ