As Things Become More Desperate...

Imaginations rise to the challenge with ever more desperate solutions. Students at the Europe Business School have come up with an elegant solution to the European debt crisis, which is based upon a simulation. The simulation supposes that mutual write-offs of debt are possible, so that states and organisations could forgive one debt owed to another in return for their own forgiveness of that other's debt.

Were such an approach to be adopted, 64% of overall debt would disappear, and in some cases debt would be reduced to as near 0 as makes no difference.

The corrolary, of course, would be the destruction of the counterparty, debt-default, derivative, and interconnected global banking industries. As Tyler Durden at notes;
this study provides a simple way to see how a fiscally-joined and central Treasury-based system 'could' come out stronger. However, the path to that 'potential' strength will be littered with the bodies of financial and non-financial equity holders, senior- & sub-debtholders, CDS traders, and FX jockeys thanks to risk-free rate re-adjustments, subordination, ringfencings, forced recapitalizations, and implicit austerity

One really has to pay some sort of credit to the madness of those propping up the euro in its current form. Their stupidity seems unstoppable. It won't be, of course, but every time reality breaks through, they double down with some new mad scheme to keep it away. Policy in the west now can only be explained with regard to psychopathology, and the emphasis, frankly, should be on the 'psycho'.

It was obvious that the euro shouldn't work from the beginning, and I remember pointing this out late one night in Balliol Library to a Swiss zealot whose response was to shout at me about 'big economic words' in 1992; the view that I formed then, and which I repeated in 2007, was that the Eiffel Tower and the Reichstag and everything else would have to be sold to shore it up, and it would still collapse.

I never thought that I'd be right though--that whole generations of book-learned social scientist political elites, a dumbed down media, and a citizenry cut off from tradition and history by debased liberal secularism would actually allow that to happen.

You live and learn. It's even more imperative now that people plan for what might come after. Good luck to the EBS plan, but what we see every day is in fact proof of Hobbes; bad and greedy people, and people who are made by them to be bad and greedy, will stand in the way of any solution at every turn, and they will be abetted by literally stupefied leaders and their taxmen and bureaucrats who know nothing else but that they should be tollkeepers for corporate welfarism.

We'd all do better stocking up on canned tuna, crispbread and beans.