Yanis Varoufakis has been clarifying his Modest Proposal 4.0.
The latest update has been this
To summarise with an analogy.
You have 100 Euro of debt.
Your only supposed to have 60 Euro of debt.
It would be wrong to expect your neighbour to help you pay the interest payments on the 40 Euro over the 60 Euro limit.
However it would be more morally correct to expect your neighbour to help you service 40 Euro of the 60 Euro limit.
Who decides what debt is classed as being under the 60Euro limit and what debts is classed as being over the 60Euro limit is anyone’s guess.
Of course the massive and obvious flaw with Varoufakis’s plan is that the debt over the 60 Euro, the debt that Varoufakis wants mutualised between all European taxpayers (and not just the taxpayers who elected for the government that borrowed the money in the first place) is that this is obviously going to be the worst, most risky debt going.
A government would be stupid not to get this risky and high interest debt of its books and onto the books of the common European.
The more Varoufakis develops his Modest Proposal the more his ideas smack of someone living in a bubble who is only looking at the academic and mathematical side of the problem. The more the idea is developed the more Varoufakis is becoming detached from reality.
We have nothing against Varoufakis, on the contrary, he is one of the only sensible commentators on the Greek crisis but nobody is perfect. And parts of Varoufakis’s solution are a sure-fire way to lead Europe into fascism, if only he could see and understand the consequences.
Varoufakis believes a surplus recycling mechanism is the way forward but you only have to look at Detroit and the municipal bankruptcies that will follow to show it has not done the USA any favours. In fact the surplus recycling mechanism has made things infinitely worse. Without the surplus recycling mechanism there is no way Detroit could have run up so much debt. The surplus recycling mechanism has turned a billion dollar issue into a multi billion dollar issue.
Just like it will in Europe.