Translated from the French by Tim Gupwell
In my articles here, I generally address myself to anyone who wants to read me, but just this once, I would like to direct my address to my fellow financial engineers, and moreover in a tone – also just this once – of provocation which is blatant but, let us hope, efficient as well.
Here we go: a monetary zone has to be able to default in its entirety and restructure its debt (namely, to be able to say, “I can only pay back X centimes for every Euro I have borrowed”) and it also has to be able to re-evaluate its currency, and, in particular, to be able to devalue it.
The Eurozone has deprived itself of these two medicines. Hardly surprising then that today it is terminally ill.
The Solution: next Sunday evening (before Tokyo opens), the entire debt for all 17 countries in the Eurozone will be re-baptized Eurodebt (French OAT bonds, German Bunds, etc.) and the following minute, the Eurozone as a whole will default.
On Monday morning, the Eurodebt will be restructured (in one go) and the exchange rate between the Euro and other currencies will be allowed to adjust naturally.
The Eurozone will have carried out its metamorphosis. It will now be able to function like any other ordinary monetary zone. It will have been saved.
PS. Would all those commentators who are likely to say that we would be better off not saving the Euro please take your comments elsewhere; I am not talking here of either a ‘for’ or an ‘against’.