Eurobonds or Bust

There are really only a few options for Europe. All of them suck. All of them will gravely inflict damage to the elite status quo.

http://tradersutra.blogspot.com/2011/07/simple-thought-on-european-debt.html

What are these options?

One of them is the Eurobond Idea. This sounds like the only idea I have heard the last year or so that is actually sane. Which is to say it won't happen until its far too late.

Look. Europe is a mess. A total mess. They have a few choices. Let the Euro collapse (Not Happening). There is too much political will and capital put into the Euro. They can structure a two tier Euro Currency structure. (Not Happening) This is quite complex and Germany/France would never approve this as their economies love the current Euro structure. When you have a monetary union, the strongest countries will always prey on the weaker ones. The weaker countries will always be beholden to the stronger ones. Survival of the fittest. The big problem in Europe is the absence of a fiscal union. The absence of a single unifying bond market. This is the only choice that is feasible for the current Euro structure and for the future of both the core and periphery.

This is the major flaw in the Euro. The lack of a fiscal union. Europe needs to unify and do it quickly.

Fiscal unification wont be easy to accomplish financially or politically. There are many moving parts and entrenched interests but just like the Latin American debt crisis, at the heart of it all is HAIRCUTS. Europe needs a Brady Bond Plan like the one that was implemented in Latin America 20 years ago. German & French Banks need to come to grips with the periphery problems. They need to come to to grips with the inherent flaws in the Euro currency itself. After the haircuts have been administered, the plans to move to a common fiscal union with one major bond market would be a lot easier.

The Euro is not going to die. Its not going away. The banker elites will likely see the Euro at way below par (Vs USD) before any type of real plan ever gets floated. So far the Eurobond idea has been shot down simply because the pain that would be inflicted on the bankers would be too great. This is ridiculous. In the absence of the ECB greatly expanding their balance sheet to Fed like proportions, I don't see periphery spreads tightening greatly.