My Letter to the New York Times

To: The New York Times
Date: 18May10

Re: Preventing Future Debt Crises in Europe by Jack Ewing

Dear Sirs:
I am surprised that Mr. Ewing failed to recognize the fatal flaw in the proposal by Mr. Delpha and Mr. Weizsacker that EU nations socialize--via EU bonds--their debts up to 60% of GNP. Sovereign debt above the 60% threshold--which was a requirement for entering the EU itself that became unenforceable afterwards--would continue to be the individual member nations' responsibility. But who but the EU members themselves will pay off the EU bonds? No one. And how will they be in the financial position to do this, if they continue to run higher debt-to-GNP ratios? This is just more woolly-headed thinking that somehow the member nations can guarantee one anothers' debts and the financial markets will not recognize that there has been created no new ability to repay.

Patrick Barron