[P2P-F] Fw: Plan to Save the Eurozone

[robert searle]

Dear All,
 
         On Radio Four Stephanie Flanders actually suggested the idea of Free Money to be created, and apparently, many economists would agree. But ofcourse Germany hates the idea unlike France. This new money could be non-repayable, and pay off , or rather electronically pay, or electronically delete most the debt altogether. Ofcourse, money as repayable loans should also play a small part in the process but the monetary burden would be largely removed from the the people, and governments of the Europe especially Italy. However, a degree of "Austerity Measures" would still be necessary BUT IT WOULD NOT BE AS SEVERE AS BEFORE BECAUSE THE DEBT BURDEN WOULD BE LARGELY EXTINGUISHED.
 
However, I am not quite sure what Soros is on about as I have not properly read his plan...but I present it all the same !
 
 

----- Forwarded Message -----
From: George Soros info at georgesoros.com

To: dharao4 at yahoo.co.uk
Sent: Tuesday, 25 October 2011, 17:49
Subject: Plan to Save the Eurozone

 
Dear Friends and Colleagues,
In today’s Financial Times, George proposes a seven-point plan to save the eurozone; see below.
All best,
Michael Vachon 
 
My seven-point plan to save the eurozone
George Soros
1) Member states of the eurozone agree on the need for a new treaty creating a common treasury in due course.  They appeal to European Central Bank to co-operate with the European financial stability facility in dealing with the financial crisis in the interim – the ECB to provide liquidity; the EFSF to accept the solvency risks.
2) Accordingly, the EFSF takes over the Greek bonds held by the ECB and the International Monetary Fund.  This will re-establish co-operation between the ECB and eurozone governments and allow a meaningful voluntary reduction in the Greek debt with EFSF participation.
3) The EFSF is then used to guarantee the banking system, not government bonds.  Recapitalisation is postponed but it will still be on a national basis when it occurs.  This is in accordance with the German position and more helpful to France than immediate recapitalisation.
4) In return for the guarantee big banks agree to take instructions from the ECB acting on behalf of governments.  Those who refuse are denied access to the discount window of the ECB.
5) The ECB instructs banks to maintain credit lines and loan portfolios while installing inspectors to control risks banks take for their own account.  This removes one of the main sources of the current credit crunch and reassures financial markets.
6) To deal with the other major problem – the inability of some governments to borrow at reasonable interest rates – the ECB lowers the discount rate, encourages these governments to issue treasury bills and encourages the banks to keep their liquidity in the form of these bills instead of deposits at the ECB.  Any ECB purchases are sterilised by the ECB issuing its own bills.  The solvency risk is guaranteed by the EFSF.  The ECB stops open market purchases.  All this enables countries such as Italy to borrow short-term at very low cost while the ECB is not lending to the governments and not printing money.  The creditor countries can indirectly impose discipline on Italy by controlling how much Rome can borrow in this way.
7) Markets will be impressed by the fact that the authorities are united and have sufficient funds at their disposal.  Soon Italy will be able to borrow in the market at reasonable rates.  Banks can be recapitalised and the eurozone member states can agree on a common fiscal policy in a calmer atmosphere.
 
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