The Green Paper neglects that low interest rates are not a sufficient condition for growth; this paper proposes a “Twin Track” Strategy for combining stability through Union Bonds with growth through Eurobonds.
According to "The Economist", Germany considers Eurobonds with horror, since they would be a big sacrifice for the creditworthy nations of the euro area. Stuart Holland turns down this argument.
A debt transfer of up to 60% would stabilise the crisis. But it should be to Eurobonds held by the ECB rather than an untried new institution and does not need either buy-outs or national guarantees .
A tranche transfer of national debt of up to 60 per cent of GDP should be to the ECB which has higher credibility on markets than a debt agency such as the EFSF.
The hypnotic attraction of the mathematical modelling of rational expectations and efficient market theories seduced many self-assumed Keynesians into unconsciously denying him. But just ‘going back’ to reading The General Theory is not enough.
