"[Public & Private bank debt] effectively the same [under TARGET2]"
Interesting assertion, as it would mean there effectively are no private banks and "too big to fail" is enshrined in basic EU mechanisms, and independent of size -> automatic bailouts all the time.
Are you referring to Sinn's analysis? While that's an interesting read (intro: http://en.wikipedia.org/wiki/TARGET2), it doesn't seem to quite support such a staggering claim.
However, I do see that European politicians are acting this way, so that supports what you are saying, but they actually have to act to do so, which contradicts it.
Certainly the rest your text simply assumes the equivalence of public and private debt, rather than showing that this is the case.
"you never defaulted on this collateral" -> There are two different "you" in this case. So what happens if one of these two "you" does default?
You are implying that the default of one "you" automatically means the other "you" never gets money again (the bond vigilantes and all that), but as the fine article showed, the same was said for Iceland and it didn't happen.
I know you claim that there is only one "you", but I just don't see that in your analysis (or in what Sinn wrote).
"It is true Ireland could have tried to hold out for an externally-led, Greek-style debt restructuring" -> again, that only applies after taking on the bank debts.
Interesting assertion, as it would mean there effectively are no private banks and "too big to fail" is enshrined in basic EU mechanisms, and independent of size -> automatic bailouts all the time.
Are you referring to Sinn's analysis? While that's an interesting read (intro: http://en.wikipedia.org/wiki/TARGET2), it doesn't seem to quite support such a staggering claim.
However, I do see that European politicians are acting this way, so that supports what you are saying, but they actually have to act to do so, which contradicts it.
Certainly the rest your text simply assumes the equivalence of public and private debt, rather than showing that this is the case.
"you never defaulted on this collateral" -> There are two different "you" in this case. So what happens if one of these two "you" does default?
You are implying that the default of one "you" automatically means the other "you" never gets money again (the bond vigilantes and all that), but as the fine article showed, the same was said for Iceland and it didn't happen.
I know you claim that there is only one "you", but I just don't see that in your analysis (or in what Sinn wrote).
"It is true Ireland could have tried to hold out for an externally-led, Greek-style debt restructuring" -> again, that only applies after taking on the bank debts.