Just digesting the new deal from France and Germany. Two things stick out.

1. No bondholder to be left behind. France and Germany have reveresed the logic of the third Greek bailout and now have been bullied into paying every bondholder everything. This obviously increases the risk of moral hazard in the global investment game because it suggests that every bondholder, no matter what how big their mistake, will be bailed out by the average citizen. Such an approach continues the scam of each “rescue” being nothing more than professional private investors being bailed out by the little guy.

2. They also want “golden rules” put into our constitution which prevents governments from borrowing above 3% of GDP in recession. This is economic lunacy first – as anyone with a passing knowledge of Leaving Cert economics could tell you – and second, politically would require a referendum here.

Make no mistake, this is the deal which will be presented on Friday and it is less of a fiscal union and more of a fiscal straitjacket where more and more of the debt of private institutions is being passed on to taxpayers. It does nothing to improve the insolvency of debtor countries and little to improve the growth prospects of Europe.

Will come back to this later in the week.

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