In Europe, we believe that the decision to resort to private sector involvement in Greece withouthaving first put in place credible arrangements for the funding of governments set in motion achain of events that extended the debt crisis to Italy, Spain and to a lesser but nonethelesssignificant extent France. We think that it also makes an acceleration of the process hinted at byAngela Merkel and Nicolas Sarkozy (fiscal integration accompanied by common bond issuance)the only genuinely stabilising outcome for Europe. If that does not happen, a potential alternativeis, in our view, sooner or later a ‘debt jubilee’, by which we refer to a wave of public and privatedefaults, with all the economic and social consequences this entails.
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