Angela Merkel’s spokesman has apparently clarified the German position on private-sector involvement in future bailouts. He said the normal IMF procedures would be followed — i.e. restructuring is a possibility. What the Germans want to rule out appears to be the kind of forced-voluntary restructuring that happened in Greece. For the third day running, I am pleased to find other people coming round to my view. On 31st October, I said: “By inventing new kinds of default rather than sticking with the normal kind, European politicians have put all of the normal rules of the game in play, which means that an investor in PIIGS debt cannot feel safe until there is a sound, fundamental economic argument that the PIIGS will be able to pay.” I made a related point in correspondence with a friend over a year ago, in a discussion of the Irish bailout: “The [Irish] government has swapped debt for which there is a well-established bankruptcy procedure — i.e. bonds, and default — for cobbled-together Euro-chimaera loans on which it is effectively impossible to default.” If Ms. Merkel would like to make me a job offer I will consider it.

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